Skip to main content

tv   Capital News Today  CSPAN  May 19, 2011 11:00pm-2:00am EDT

11:00 pm
it provides capital through treasury purchases of preferred stock or debt instruments from each bank. since banks leverage the capital, the small business lending fund will increase lending to small businesses in an amount that is multiples of the capital provided to participating banks, helping to expand and crete new jobs. the interest rate banks pay to treasury helps incent them to lend to small businesses in need of financing. the rate will be reduced as the bank increases its lending to small businesses ensuring the benefits only go to banks that use capital to extend additional credit. i'm pleased to report, we've received 702 applications and total requests for $10.1 billion in funding. we expect to complete these in the next few weeks and complete the fundings in june. we believe the fund will have an impact towards small business lending across the country which will help create jobs and grow
11:01 pm
the economy. we're looking ahead to identify and address challenges facing small businesses that will be important to overcome to build a competitive economy. in march, treasury co-hosted a party that had business leaders and academics to draw additional attention troubles facing small businesses, reducing barriers to their success and find new ways for the private and public sector to work together. with that, let me thank you again for the opportunity to be here today and reiterate how appreciative i am of this committee's work and the commitment to america's small business. i'm happy to answer any questions you may have. >> thank you very much. we'll have a first round of questions by the members. we've been joined by senator cardin from maryland. we appreciate him being with us this morning. before i want to get into the questions, i want to submit things for the record that i found quite encouraging. one is a document i received about a couple of weeks ago from
11:02 pm
the vistage confidence first quarter report. it's the largest survey of ceo. this is a for profit company operated for many years. they polled their members that represent businesses from 5 million to 50 million, some are smaller, some are larger, that's their average member basically. the wonderful outcome is that 65% of these ceos stated that compared to a year ago, overall economic conditions in the u.s. from their perspective have improved. 54% of the ceos expect the firm's total number of employees will increase during the next 12 months. 47% said the best way the government can help create jobs is expand access to capital. and 76% anticipated their firm's sales revenues will increase.
11:03 pm
i wanted to submit that to the record. i think that is one evidence -- one piece of evidence that suggests we're moving in the right direction, although we have many challenges ahead. the second is a document about the unemployment rate. i think that it's important for us to understand the facets of the unemployment rate which we don't always by just talking about the averages. but the rate for individuals 25 years or older is only 7.6%. it's higher than we would like, but it's 7.6%. interestingly, unemployment rate for workers with a college or graduate degree is only 4.5% in our country today. unemployment rates for high school is 9.7. with some college or an associate degree, it's 7.5, but unemployment rates for workers with less than a high school diploma is 14.6%.
11:04 pm
while this committee can lower the unemployment rate by the work that we do, passing laws and new programs and policies, to help get small businesses up and operating, some of these challenges are structural. in terms of how this country is either investing or not wisely in the workforce to provide them the skills they need to create jobs. so while i will, as chair of this committee, take a good bit of responsibility to end this recession, i would suggest that the committees of education, the committees of health and welfare and education have a similar challenge in bringing these numbers down. i think that the administration understands that and it's why they have a broad array of programs to end this recession, not just small business bills, but we're doing our part. let me start with the question
11:05 pm
to you, mr. graves, because as a strong supporter of the small business lending fund, which is a new and innovative approach, 700 banks have applied. that's less than about 20% of those that are eligible. as you know, i intended for all the community banks to be eligible but we've run into some difficulty there because of some restrictions in parts of the law. however, about 3,700 c corporation community bankses are eligible, yet only 20% have applied for funding. that's about 600 banks. one way to look at it is that's 600 banks more than there was a year ago that have access for money to lend. can you explain why treasury has not made your investment decisions yet? when can some of these banks anticipate receiving the green light from you all? there are several in louisiana that are actually quite excited about this opportunity?
11:06 pm
can you shed some light on this for us? >> we have worked very quickly to try to get these two new programs that treasury is implementing under the small business jobs act up and running. we worked expeditiously. we have a very strong team we've put together to stand up these two new offices within treasury to get these programs off the ground. i think it's important to remember that while we're moving as quickly as we can on those programs, it's important and in fact you required us to ensure that we balance both the speed with which we get the programs implemented with the need to ensure that we're making prudent investment decisions and protecting the taxpayers' dollars. so we have instituted a fairly robust, very robust system of reviewing potential investments, ensuring that every institution
11:07 pm
that applies meets the eligibility criteria that we then consult with federal banking agencies and in some cases the state regulators when appropriate, and then treasury performs its own individual assessment on the financial standing of that institution and its aability to participate in the program. once we make our approval decision, we then will let the banks know and they will be able to close within 30 days of receiving that approval. we have conducted a significant amount of outreach with community banks all around the country. we've conducted more than 30 webinars, teleconferences across the country. we have a dedicated web page and a call center with our small business lending fund team. we talk with community banks all across the country every day of the week. we look forward to announcing
11:08 pm
our first round of funding very soon. in fact, i expect within the next few weeks, we will be making those decisions for the institutions and we will be getting some closings beginning in june. >> okay. i'm going to ask you, not right now, but in a few minutes, your response to some of the gao report findings that just came out on this program. but let me ask marie johns, mrs. johns, if you could put the chart up, the 39 programs that were either created or enhanced under the small business jobs act of 2010, most of them are completed by your agency, and you were the implementer for this, i understand, and most of them have been completed. but there are two particularly, there are 28 provisions that have been completed. that's 72%. nine provisions in the process of being completed and two provisions that are not complete. the two i understand that are
11:09 pm
fought complete are the export assistance centers and one on contracting policy. can you comment on why the delay on those two particular programs? or do you have any comments about that at this time? >> yes, chair landrieu. thank you for the question. i also want to thank you for your leadership on the small business jobs act and to ranking member snowe, we greatly appreciate your support. many of the provisions that made their way into this act. export -- overall, i'm very proud of the way that the sba has moved forward to implement these provisions. we took this role very seriously, because we know that small businesses were waiting for these critical tools to be in their hands so they could grow their businesses and create jobs. as far as the export provisions are concerned, a lot of work has been done. very shortly, we will be naming a new associate administrator for the office of international
11:10 pm
trade. individuals have been hired in additional trade counselors have been hired in two of the usiacs around the country. the process is ongoing and there's a requisition out for additional hiring. that process is well under way. we have provided reports to this committee regarding travel and other -- >> the contracting policies seem to be slow in being implemented. >> the contracting policies are -- first of all, one of the primary contracting policies that the bill advanced was the clarification of parody, regarding parody, that provision in the bill immediately gave contracting officers across the government clear signal, clarified rule so that they had a much more available at their hand in order to meet the
11:11 pm
government's 23% contracting goal for small businesses, because as you know, prior to the small business jobs act, there was confusion about ow our programs lined up, but the parity issue in the small business jobs act resolved that so that was an important provision under contracting. as far as other of the contracting provisions in the act, as you know, the contracting process is not immediate. that is not a process the sba owns and we can't stand up those new provisions on our own. we have to go through a process through the federal acquisition council and it takes time. we are moving apace. many of those provisions are poised to become effective in the very near future. >> thank you. my time has expired. senator snowe? >> mr. graves, with respect to t the treasury lending program, first of all, the 702
11:12 pm
institutions that are now participating in the program, how many loans have actually been issued? >> we've actually not made investment decisions on any of those 700 institutions that have applied, so no loans yet have come from capital that comes out of the program, but part of the -- the deadline for this program was september 27th, and we expect that all applications that meet the eligibility criteria will have been aapproved by september 27th, so we'll get those dollars out the door to the community banks so they can do the business of supporting small businesses. >> so it would be this fall, i mean when small businesses could actually receive the actual dollars? >> that's a good question. we believe that, beginning within the next few weeks,
11:13 pm
dollars will begin to go out the door to community banks and that those banks will then lend based on the incentives based on the small business jobs. >> based on what i was saying in my opening comment, ultimately what it suggests is that there's going to be minimal new small business lending that you can actually -- very few new institutions will be participating in the program. in fact, as i understand it, it's only about, i think $3 billion that would represent new institutions. only $3.3 billion. is that true? >> you know, it's a good question, because a number of people have asked that of us as well before. it's important to remember that this legislation -- that this program is not a t.a.r.p. program. i just want to make that clear at the outset. any institution that meets the
11:14 pm
eligibility criteria, regardless of whether they are a t.a.r.p. institution or a nont.a.r.p. institution is eligible to apply and participate. the other thing that i would say is that this isn't a program to assist cpb banks. in fact, there's no opportunity for an institution to decrease their interest rate without increasing the amount of small business lending that they do. >> i guess the threshold you're using as a standard, they only have to increase it by 2.5% i mean essentially. they can exchange, you know, what they're receiving under t.a.r.p. for this at a lower interest rate, and they only have the increase their small business lending by 2.5%. that's just a minimal increase frankly. you are replacing one with the other. the objective isn't to assist
11:15 pm
the t.a.r.p. recipients but the net effect is that it is happening. so i think that's the point here, is that are we just turning over the same money now benefiting those who have already received, you know, a great benefit from the united states government that we like to invite other institutions into the fray to expand the loan portfolios among banks and other entities that can issue these loans. i guess that's my concern, and i think it's one that needs to be addressed. from what i understand, is that the t.a.r.p. recipients seeking investments that exceed the remaining t.a.r.p. balances by only 10 to 30%, so it really does beg the question of how much new lending will actually occur under this program? if they meet the 2.5% loan increase in lending. >> i share your concern. in fact, no cbp institution will get to an interest rate of 1%
11:16 pm
unless they increase their lending to 10%, just like any other institution that participates in the program. the program was really meant to, as i understand it, to increase small business lending. it's really to get capital out to small businesses all across the country. >> the question is how that happens. i'm just not -- from what i'm understanding, it's not exactly happening with the maximum effect? that's the problem here, because of the perverse incentives it's created in the program. for example, you know, from 2008 to 2010, lending institutions, small business lending declined by 9.2% to $652 billion, the second lowest since 2005-2006. the latest index shows that small business lending in march of this year already increased by 12% compared to a year ago.
11:17 pm
you're using an exceptionally low benchmark, four quarters, june 2010 to incentivize banks when in fact the small business lending is already occurring without this program having been implemented yet. that's the problem. >> would you like me to answer? >> yes. >> i think it's important to remember that the baseline that was set in the legislation was done so because it was really looking as a means to increase small business lending from where we were as you suggest, just last year at the low water mark in recent years. if institutions were given a baseline that was significantly higher, those institutions would not participate in the program. so what we're trying to do is incentivize banks to increase their lending, giving them all the tools at their disposal.
11:18 pm
giving them the capital they need so they can get the dollars to all the small businesses around the country that are looking for capital. >> just a follow-up. i know my time expired, but if they have maintained the 12% trend that's already occurring, they can lock in on the interest rate of 1%. that's the point. that's the incentive for them to transfer from one program to another, the t.a.r.p. program to this program. >> thank you. >> let me thank senator landrieu and snowe for this hearing. one of the most important responsibilities of this committee is oversight. it's one thing to pass laws but it's another sure those have th intended effect. i know that's sometimes hard work for the committee to do and applaud our work of this committee. the legislation, the small business jobs act had many important provisions. . i was a little late getting here today because i was attending a conference from our small
11:19 pm
business centers, development centers on export activity. and that was one of the major issues in this legislation. and we're making some progress on export activities. we also had tax credits, i think it's important for us to understand how they're working. but the first point that's been mentioned here, this bill was aimed at proving access to credit. we need to get better answers. this was a major initiative. some of us would've preferred this money going into direct loans. and we were told, no, this is going to be the incentive to get the community banks more interested in making loans to small businesses. and this was a large commitment to federal resources. so we need better answers. we need to know how much is getting out there. i'm a little disappointed it's taken this long. many of us thought this would get out a lot quicker and there'd be more interest. so i just want to support the
11:20 pm
questions that have been asked by our two leaders. we need to have better information to this committee as to how this program is working. and the question senator snow asked as to whether this is just what would've happened and we're giving incentives that community banks are not needed or whether we really have leverage of new activity. it's a question we need answered. so i'm going to ask our leadership here to follow up and make sure we get information in this committee to make sure that we are accomplishing what we intended to do. i want to talk about another part of the small business jobs act. and that was to improve government opportunities for small businesses. i helped draft a provision in the small business jobs act that requires federal contracting officials to complete small business training before receiving certification. there is a real concern as to whether the procurement officers
11:21 pm
in our agencies have a bias towards existing relationships with contractors, mainly large businesses, to the exclusion of opportunities for small businesses in our community. and that this committee wanted to do something about that by requiring that the contracting officers have greater sensitivity to the -- not only the letter, but the spirit of our law to engage smaller companies. there was also a second provision added that requires reports to congress dealing with better known disadvantage businesses. can i ask either of you or both of you if you can give us a status as to how the implementation of those provisions are working and how you intend to comply with your requirements on keeping us informed as to the progress being made in regards to those targeted small businesses? >> good morning, senator.
11:22 pm
we are also grateful for your support of this important piece of legislation for our small businesses. our government contracting organization works regularly with contracting officers across the federal agencies, we meet on a regular basis, monthly, actually. in addition we have a senior level effort focused on contracting and ensuring across federal agencies that at the deputy secretary level that those individuals are aware of what the contracting goals are across the different certification programs that the sba manages. and they understand how their agencies need to organize and to ensure that information flows so they are also able to focus on meeting their particular goals for federal contracting. >> are they bringing the employees in responsible for train sng. >> yes. we are working with the federal acquisitions institute and the
11:23 pm
defense acquisition institute to develop a curriculum for contracting officers that will be an enhancement to the training work we're already doing on a regular basis. >> and what is time frame for being able to implement this training curriculum? >> within the next few months. >> can you be more specific? >> probably in the september/october time frame. >> and will all contracting officers be required to go through this training? >> yes, that is the -- >> how long will it take for the contracting officers to be able to get the benefit of this new curriculum? >> senator, i don't know the end date. we've not established an end date. the focus has been getting the curriculum in place and getting the training. and we have a commitment to the training as long as it takes. >> i think my office and i think the committee may also be interested in reviewing the curriculum you are changing and the time schedule for contracting officers in which
11:24 pm
agencies you anticipate being the first and the time schedule necessary to get all contracting officers up to speed. >> certainly. >> with this new curriculum. >> be happy to. >> and the reports to congress that are required, i take it you'll meet the deadlines and get us information as the specific progress being made with better known disadvantaged businesses. >> yes, senator, we will. >> one more question, getting back to credit. there was a second part initiative other than the sba guarantees, we also provided funds to state governments who had programs dealing with credit. i know what's being done in maryland, but i would ask our committee be kept informed that you provide to us the specific activities that have been generated by states as a result of the additional resources made available to federal level -- my reason for asking that, madame chairman is following up on senator snow's part. i'd like to see if you could the
11:25 pm
relative activities generated by our partnerships with the states versus the additional money so we can see where we're getting the most activity for the resources. so if you could make that information available to us, it tells us where we need to put our attention. >> i thank you. senator, you raised several excellent points. and our next panel that will have specific information about how those state programs are working. but i want to remind everyone that one of the reasons we couldn't do direct lending is because of the strong opposition from the minority party. they would not approve of direct lending from the sba. so in order to get money out to small businesses with that not being an option, the only option we really had was to work either with state programs, regional programs, or the community banks. so we will see. we've crafted something, we hope it works. we're not sure it will. that's what this hearing is about. i myself as a lead architect of
11:26 pm
this bill are interested to see. because there were different views on both sides of the aisle, we didn't have all options available to us, but we did the best we could. let me ask a question and we'll go through a second round and get to our second panel. one of the things i was most interested in. and i'm not sure we were able to be successful, was giving some relief for debt refinancing for the commercial real estate section. we wrote a section in the bill entitled small business access to capital trying to provide some relief refinancing. our understanding, however, is that there has been minimal usage of this program. we're hearing from banks that the rules that are written which we think might be much more narrow than what our law intended is not helping to provide the relief that we had hoped for. so mr. graves, do you have any
11:27 pm
comments about this particular section? or ms. johns? >> yes, senator. i'd be happy to respond. the 504 commercial refinancing initiative was a new program for us. and in every instance with a new program, we're always balancing two key objectives. that is getting the program into the hands of small businesses as soon as possible, but also ensuring that we are delivering the program in a way that ensures we're good stewards of the federal resources. and so those are the objectives that we were balancing as we rolled out the 504 re-fi. once we put the initiative into the marketplace, we also are constantly gauging how the market is responding. and in the case of 504 refi, it became clear to us that we needed to take a second look at -- pardon me, opening up the provisions of the 504 re-fi to
11:28 pm
include more businesses, and that we have done. we have made a mid-course correction. the comment period on the change has just closed. we made sure that we contacted all of the industry associations and talked with them and we're in close contact as we were developing the mid course correction. and so we're very -- we're looking forward to getting the new 2.0 version of the program in place. and we're sure we'll see some -- >> because this is very, very, very important. many, many, many small businesses have seen, of course, the value of their buildings that they own or their, you know, commercial collateral basically decline. but they still have fairly strong balance sheets. and a refinancing opportunity could really help them. and if it's done correctly, it will work. and if not, it's going to be another missed opportunity for businesses out there. and contribute to the spiralling down of this market. so again, our committee can't do everything in this regard. but this is a very special
11:29 pm
initiative. please keep us posted as to how. and if the it's the language of the law that's preventing you, i would be open to some modifications. but hopefully you can take the language as it was written and implement the rules so it actually works and people can take advantage of it. and one more question, then i'll turn it over to senator snow for her second. let me see. the jobs act we talked about this, but it's worth repeating again. the state trade and export promotion grant pilot program, can you provide the committee with an update on the status of this program. specifically how many of the 56 eligible states have submitted applications for this particular program. >> yes, senator. i would be happy to do that. we have received applications from 53 of the 56 eligible. and in fact, as we speak, there is an inner disciplinary team of
11:30 pm
reviewers who are meeting at the sba. they have been there all week. we compiled a team of folks from around the agency to bring various expertise to the review process. in addition, we also sought out reviewers from other federal agencies. so we have a reviewer from xm bank, from the department of commerce because we wanted to have the strongest possible team. so they're hard at work this week and intend to complete their work by the end of the week. so we are very eager to make these selections, get these proposals, the proposals back out to the states. >> just finally as i turn it over, i want to be very clear that i agree with the senator that the oversight of this committee is very important. we've tried instead of sitting he here, we've tried many different things. we're now in the process of evaluating, what works well,
11:31 pm
what's not working, but you can't stand still in a situation like this and do nothing. you must move forward aggressively. so we've started new regional programs, export programs, partnerships with our community banks. we did everything but direct lending because we were blocked from doing so. but we could potentially revisit that later on. but let's see what's working. and then make the adjustments as we go forward. but getting capital into the hands of main street businesses, not businesses on wall street, not big multicorporations that have many ways to access capital, but main street businesses remain our goal to drive down these unemployment rates and provide opportunity for the american dream. >> may i make one comment in response? i just want to assure the members of the committee that at the sba we share your sense of urgency on that and the notion of constantly looking at how the programs as we get them out into the hands of small businesses, we are constantly looking at how
11:32 pm
those programs are being received and what tweaks -- what mid-course corrections we need to make. as we did in the 504 re-fi we acted quickly toward that. i am out, i'm traveling regularly -- since the first of the year, i've been to over half of our regions talking to hundreds literally hundreds of small business owners asking them about the small business act. we've had a small business jobs act tour, 13 cities planned, we were down to the last two cities. we are out and about talking regularly to small businesses and seeking their input on how we can do -- what we're doing better, how we can make these programs work more effectively for them. so i want to assure the members of the committee that we share your sense of urgency. >> we appreciate the effort. and we're going to be looking for some very clear results as the weeks and months unfold. senator snow? >> thank you, chair landrieu.
11:33 pm
just to follow up on the issue of direct lending. the administration opposed direct lending, as well. essentially did not want to become a bank. a big difference between guaranteeing loans than it is to write and be directly involved in issuing those loans. in fact, there's an article right here that "new york times," today is march 10th, why won't the sba lend directly to small businesses? it's an indication that the government would have to stand up in his words a massive bureaucracy and it'd take too long, you'd be frustrated. there's a point to legitimate issues there in direct lending. and in any event, i think the point is here now is that we have to get into the oversight issues and to make sure that this program is working. i do have strong concerns about on the t.a.r.p. side. and i've already indicated that to you. one other issue, i've introduced a bill on a couple of issues concerning the lending program,
11:34 pm
but one i wanted to raise with you today because you may already be addressing it is that my bill would prevent the treasury from issuing a loan to any institution that has been deemed by its regulator to be unhealthy. that entities regulator. what would you be doing in that regard? do you get reports? how do you evaluate those who are seeking loans under this program if their regulator deems them to be unhealthy. you're not prohibited from continuing to issue those loans. >> thank you for that question, ranking member snowe. we share your concerns about ensuring every investment made in an institution is done so in an institution that is healthy, that has the financial wherewithal to increase lending to small businesses. in fact, as i mentioned at the beginning, we've implemented a very strong and robust system of reviewing every application that comes from a community bank.
11:35 pm
each institution has an initial eligibility assessment performed by the treasury team. then we conduct a consultation with the federal banking regulator of the institution. in some cases where it's appropriate, we conduct a consultation with the state regulator, as well. and then treasury has its own internal investment team that conducts a separate, independent analysis and evaluation of each and every one of those applications that comes back to us from the federal banking regulators before we make any decision to make an investment in a community bank. really what we're trying to do is make sure while we're trying to get these dollars out the door and support small businesses, we want to make sure that we make prudent investment decisions and do our very best to protect the american taxpayer. >> thank you. >> thank you. >> administrator johns, one of the issues i wanted to explore
11:36 pm
with you some expressed interest in increasing the loans. it would crowd out small borrowers. what's your response to that? i know that according to the most recent data, 60% of the agencies, loans have been under $150,000, and over 80% have been under $350,000. it appears the small loans have been growing faster than the larger loans. but can you comment on this issue? because clearly we want to make sure that smaller entities -- smaller businesses are having access to these loans. and it looks like it's certainly possible that it's occurring. but i'd like to hear comments. >> actually, there is no indication of crowding out effect. in fact, i'm sure we have shown you data that there was a major spike in lending at the end of the year. that was as a result of the fact that there was much pent up
11:37 pm
demand for the 90% guarantee. so there was a lot of activity at the end of the year. that spike was not due, pardon me, to the larger loan size. in fact, our data shows that really just 3% of our loans are in the larger loan sizes between the $2 million and $5 million. and that has been very consistent over the course of time since the passage of the small business jobs act. so the notion of crowding out effect has not at all occurred. >> that's great. also as you know, the loan guarantees, we reduce the borrows, fees, and lender fees, and that's not going to reoccur in this economic climate. do you think that will discourage lending at all? i mean, do you think it's going to have any affect on loans? >> well, certainly that was -- those were initiatives that were very well received by the
11:38 pm
market. but we are still continuing to see general uptick in loans. and the other reality is that the small business needs for capital are not monolithic. yes, we have businesses that need the higher loan limits, which is why it was an important provision in the jobs act. but we also have small businesses who have reacted very well to the increase in microlending. so we have businesses who need -- small businesses need capital across the spectrum from the relatively small dollar loans in the microlending space to the small $5 million available through the 7-a program. so what we are charged to do as an agency is making sure we're looking across that spectrum and continuing to identify gaps that may still exist and to keep this committee apprised of that and to seek your help in addressing those. >> thank you. >> thank you. >> senator? >> thank you, again.
11:39 pm
thank you both of our witnesses. and i didn't mean to get into a debate on direct loans. but if i might just point out two points. first, sba does make direct loans in emergency situations. number two, when there's a 90% guarantee of the sba loans, in other words taxpayers in line for 90% of these loans, seems to me making it 100%, we can have direct accountability when you're dealing with a third party bank, it's much more difficult for us to get the results that we want out quickly. that was my point on it. but i am very proud of the small business jobs bill. and i really do congratulate senator landrieu. i was at caucus meetings when you're trying to get floor time, and there's no stronger advocate on behalf of smaller businesses and doing our work and senator landrieu. and it's not easy to get the floor time to get the bill passed. and this is a major bill, major
11:40 pm
new tools available to help small businesses. and we're very proud of this bill. but our responsibility's oversight. and to make sure that every dollar made available is used to the maximum advantage to create jobs. and that's through small businesses. and i come back to procurement. and i know i represent the people of maryland. and because of maryland's location we have a lot of government agencies located here. and we have a lot of small businesses that depend upon government procurement. so it's of great interest to the people of maryland. there has been documented abuses by agencies. and one of the things we've been able to do in this committee is to support the sba and give it the tools. it was this committee -- i serve on the budget committee. it was a direct result of senator landrieu and senator snowe's efforts that we are able to expand the budget. and that gave the sba the tools so you could be the advocate for
11:41 pm
small businesses within the administration. we know agencies at times want comfortable relationships who they're already doing businesses with. so they bundle small contracts could be given to small companies into large contracts which only large companies can compete. and we want you there fighting on behalf of small businesses saying, no, don't bundle these contracts and elbow out small companies from being prime contractors. because we know in the prime contract subcontract relationships there are abuses there also. better off to get small companies really into the game. so we do put a lot of confidence in the sba being there as the advocate on the behalf of small businesses taking up the fight within the cabinet room and within the administration. so the curriculum you're developing for training we see as a major step forward. and i just urge you as you implement this law that you bring in the small companies and
11:42 pm
listen to their stories as to their experiences with the department of defense or with the department of agriculture, or all the agencies of government. because there are horror stories out there as they try to get through the mine fields of getting their fair share of the procurement work of government. so i appreciate your response as it relates to the curriculum, training sessions, et cetera. but it's also going to take the sba as an advocate to fight. in the relationships they have with large contractors where we've got to get small business in the door there. >> thank you, senator cardin. i have to say to you, i couldn't agree with you more about the importance of the sba's role as the voice of small business. we take very seriously and wear very proudly that mantle of being the advocates of small businesses within the government
11:43 pm
and beyond. and as far as my personal commitment, i've been involved in small business issues long before i have had the honor to serve in this administration in this role. and i'm a local person. and a lot of people have my phone number. so i'm regularly taking phone calls on a saturday. people stopping me at church, small business owners. i know a lot of them talking about issues and giving feedback on how our agency can work more effectively. so believe me, you have my 150% commitment. and that's why i do make it a point of talking to small businesses whenever possible. we've got to know how these programs are really playing on the field and so that we're prepared to make adjustments as we need to and that's what we do. >> thank you. you're going to be getting more calls. i'm looking at six i picked up this morning. >> hand them over. >> i'm taking this case work myself. so i'll be contacting -- >> we'll be happy to come to your office and get you an update. >> thank you very much. and the contracting of small
11:44 pm
business has no stronger advocate than senator cardin. and thank goodness for him. i thank you. i have one question, but i'm going to ask for a response in writing about the tax provisions in the small business lending bill to treasury can supply this in writing. when will you be able to provide an analysis of whether small businesses were able to take full advantage of the tax provisions in the bill? i know that some small businesses have not yet filed their returns and do a delayed filing in october. but i'll ask -- i'll submit that to you and you can respond in writing. >> we'd be happy to do so. >> thank you all very much. i appreciate it. and we'll move to the second panel now. thank you. as they are moving to save time, let me begin introducing our second panel. we'll be hearing directly from small business owners. from their view and perspective how this new bill is helping
11:45 pm
them or providing opportunity. we'll also be hearing from the association of the self-employed, and the vice president of a rural program from north carolina. so first, let me introduce eric blenderman, a founder and owner of a highly rated new york city restaurant. he's currently constructing with the help of an sba 504 land a second raund. restaurant. so we're looking forward to hearing his testimony this morning. this association represents the interest of america's smallest businesses. employing themselves. one person. she is a new yorker. and finally, patrick woody, vice
11:46 pm
president for north carolina's rural center. at the rural center, he oversees capacity building programs in the area of infrastructure, business development, workforce development. we're very interested to hear this morning mr. woody, how one of our state programs that many of us supported so whole heartedly how it's working. >> thank you, chairman, members of the committee for inviting me to testify this morning about issues pertaining to implementation of the small business job act of 2010. to understand, i think, how the small business job act has impacted main street and specifically my restaurant in new york city, i think it's important to get a little bit of background around where my restaurant came from. it's a small business success story that was conceived initially after the tragedy of september 11th in new york city. and those trouble times, my business partner and i turned
11:47 pm
our attention from grieving to reconstructing. i was then a 27-year-old kid focusing on financial models, preparing the business plan, otherwise taking the business sidesteps to turn our broad ideas into reality. the chef, of course, focused on the artistic side. i went to the place that had the money, banks. i would leave my day job at my law firm, go to the teller at hsbc, chase, bank of america, you name it, in my best business suit say to the teller i was a small business owner, here was my partner and we were looking for about $500,000 to open up a restaurant in new york city with no experience, no capital, and nos a sets. fortunately after being turned away by just about every bank up and down manhattan, wall street, 5th avenue, 6th avenue, you name
11:48 pm
it. i persisted with a consortium of other banks, one called the new york business development corporation. the purpose is to provide creative underwriting solutions for non-traditional lending risks. the category into which we clearly fell. because of the relationship with the united states small business administration and conventional banks, they were able to mentor me through what was a complicated and difficult sba lending process. but with their assistance, i was able to procure a $500,000 sba 7-a term loan, a $50,000 small business development loan, and was able to open and construct. in terms of public/private partnership, the lending package worked exactly as designed. my partner and i used funds to renovate a restaurant that had gone bankrupt as a result of september 11th and converted it. now more than seven years after
11:49 pm
opening, we employ approximately 35 individuals, generate hundreds of thousands of dollars in city, state, federal tax revenue every year. of course, all good stories must come to an end. but from our small business, that ending is unclear because despite our successes, our continued existence is bounded by the terms of our commercial lease. which has less than three years left before it expires. more over, despite my best efforts to arrive with business terms, we have not been able to extend that lease because of various economic conditions that the landlord has placed as a condition of lease renewal. enter the small business stimulus package of 2010. the small business stimulus package of 2010 was initially put to vote in july of 2010, which was around the time that the chef and i had located an alternative location within which to either open up a sister
11:50 pm
restaurant to my current restaurant or to relocate my current restaurant should the time arise that relocation is required. about that time, i began approaching the nybdc once again to request financial assistance, not to lease the property, although the property was available to lease, but to purchase it outright. to attain what i call a forever home. that place that i would have the ability to sit there and manage my business in perpetuity without ever having to run the risk of being thrown out from my place of establishment because of rent increases, other conditions, or various other provisions which could attach as a result of a leasing relationship. and unfortunately, i was told by the nybdc that although we were a credit-worthy business and we were qualified to obtain lending through various programs, the sba's lending limit of $2 million prohibited us from purchasing that property outright or conducting our expansion plans.
11:51 pm
in addition, the sba informed me that the requested financing package was going to result in a total of nearly $60,000 in lending fees, which for a small business like a restaurant owner is a very large sum of money. notwithstanding the nybdc courted aggressively, many lenders, citibank, hsbc, and others, and we ultimately decided on citibank, which was the recipient of troubled asset funding. and were able to obtain to permit construction. broken down in the form of a 504 sba loan, $1.5 million from citibank, and a further 7-a loan in the span of $420,000. the importance of this expansion to my business cannot be understated. the sba 504 program has allowed
11:52 pm
me to buy this outright. because we work on tight margins, we would've never been able to purchase this property but for the existence of the small business stimulus package. second, the collective terms will result in my restaurant paying thousands of dollars less a month than i currently pay in fixed costs for my existing restaurant. most importantly, we are in the process within the next 90 days of hiring 65 new people to staff and run my new restaurant. importantly, these benefits do not just appeal to me as a business owner, but the city and state. in addition, each of my 65 anticipated employees will pay federal, state, and local taxes and contribute their fair share to social security, medicare, medicaid, and related entitlement programs.
11:53 pm
payments to the hundreds of food vendors, beverage, and other vendors who serve my restaurant which include locals and others provide additional revenue for local federal and state. these have begun accruing despite the fact we are under construction as we're using our funds to employ dozens of architects, electricians, plumbers, and dozens of others. it should be measured by the cash flow and profitability. i believe the same metrics should be used to utilize the small business package of 2011. as businesses take advantage of this, this committee should analyze whether they're contributing to economic expansion, creating new revenue streams for government entities, and repaying their debt with interest and without default. if on balance the net sum of loans made to the stimulus package of 2010 achieves these objectives, i think the united states will have benefitted great through from it. i'm confident we will meet these objectives, and i'm grateful and
11:54 pm
thankful for the passage of this bill. thank you for your time this morning and i apologize for having run slightly over. >> that's okay. with a testimony like that, you can run a half an hour over your time. it's music to my ears to hear how helpful our efforts have been here to you and your restaurant. but i want to say how extraordinarily pleased i am that you took your time to come to this committee to share your story of fighting so hard to create a business in the united states of america. i can only say it should not have been that difficult. and i can only say how tragic, shameful, and ultimately destructive it is when a gentleman with your credentials, which i want to read into the record. you then graduated with distinction in international law from the university of oxford, yet as you testified you went to every bank on 5th street, 6th
11:55 pm
street, and beyond to try to get a loan to start a business and you were turned down. so my question to those listening is if a gentleman with a degree of distinction from oxford can't get a loan from the united states banking system, how is it possible for 99% or 100% of the kids that i represent or young people in the state of louisiana who don't go to oxford. how is it possible for them to start a business? that is why this committee presses the envelope for new and innovative ways to get capital into the hands of young americans who we spent millions of dollars literally educating, but yet our system falls so short on giving them the opportunity to start business. as long as i chair this committee, we're going to continue to push open this door. >> thank you, chair, thank you,
11:56 pm
ranking member, and members of the committee for allowing the national association for the self-employed to testify here today on behalf of our 200,000 members and the 22 million self-employed americans worldwide. we're here today to talk about the implementation of the small business jobs act. and the next steps we must take to improve and expand upon the vital benefits it offered to america's smallest businesses. with the current economic dialogue so focused on jobs, it's important to note that our members and the 22 million americans that are self-employed are not solely temporary freelance workers between permanent jobs. it means you have created a job for yourself. self-employed businesses successfully provide for families, contribute to their local communities, and these jobs are just as valuable to the economy as an office or a factory job. and these businesses are just as essential as their larger counterparts. despite accounting for 78% of all small businesses in the united states and collectively
11:57 pm
contributing close to $1 trillion every year, the dynamic self-employed community is too often misunderstood and underrepresented in the policy fashion for small business. our nation's lawmakers and regulatory agencies commonly craft policy geared toward the tiny sliver of the business population that is corporate america. the narrow policy focus on the small percentage of businesses is why the small business jobs act was so crucial to our community. this legislation included key provisions that benefitted the vast majority of microbusinesses and provided much-needed bottom line tax savings to the self-employed. for years, the nasc has been working to allow a key disparity is the treatment of health insurance costs. the self-employed do not receive a business deduction for health insurance costs causing these businesses to pay more in payroll taxes than all other businesses. with the passage of the small business jobs act, the self-employed were allowed to
11:58 pm
deduct their 2010 health insurance costs from the self-employment tax on their 2010 tax return. what did this one-year deduction mean for someone who is self-employed? based on the average health insurance costs out there in the individual market, the one-year deduction in this bill saved self-employed business owners approximately $968 in taxes. and depending upon their cost of coverage, many businesses save more money. member michael kagan of maine is owner of m. kagan and associates, a self-employed biotech consultant. he saved in taxes due to the one-year deduction in the small business jobs act. and he used that money to reinvest in office automation and help grow his business. timothy doyle from louisiana, an electrical contractor saved $730 savings from this one-year
11:59 pm
deduction and put that money to pay for his next two months of health insurance premiums. and in this difficult economic time, this deduction in the small business job act helped business owners lower their tax liability or provided them with a substantial refund that could be used to reinvest in their business. best of all, this deduction, though temporary put the self-employed, america's smallest businesses on the same playing field as other businesses for the first time. the question now should be whether we extend this benefit and how we better implement it for the future. the nac strongly supports leveling the playing field permanently. we understand, though, in this difficult fiscal climate that an immediate permanent solution may be difficult to achieve. however, we strongly feel that this deduction should be extended at least for a two-year period. should an extension pass, we urge congress to encourage the irs to rethink the approach in implementing this vital deduction. the method the irs used was very
12:00 am
confusing and not the standard approach for a business deduction. they created a new line, line three in form 1040 schedule se, the form utilized to calculate self-employment tax to allow self-employed taxpayers to take this deduction. it would be preferable and a lot less confusing to taxpayers to include this deduction on form 1040 schedule c in part two, which incorporates all business expenses. self-employed taxpayers had to carefully read the directions for a schedule to take advantage of this one-year tax deduction since deductions are not typically on this form. further more, because the bill was passed so late in the year, it left little time for the irs to provide guidance to stake holders and taxpayers on this deduction. an extension of this critical deduction for the self-employed community needs to be passed as soon as possible in order to allow the irs to be able to put this on the 2011 tax form and bility ake holders ..take advantage of this
12:01 am
benefit. in the current climate, policy makers on both sides of the aisle have been struggling to find ways to stimulate the economy while efforts have been notable and helped some industry sectors, only the small business jobs act has helped america's smallest businesses. america's self-employed have long asked for the same opportunistic seed as their larger counterparts. they seek no more than the same benefits that big business receive. so we encourage lawmakers to extend the key provisions in the small business jobs act. thank you. >> thank you very much. >> thank you, chair landrieu, ranking member snowe, and members of the committee for this opportunity to report to you on north carolina's implementation of the north carolina capital access program. i'm vice president of rural development programs for the rural economic development center. for more than 20 years, our non-profit organization has implemented sound chick strategies to improve the quality of life. typically, the rural center works in 85 of north carolina's
12:02 am
100 counties. the north carolina capital access program is the exception. at the request of north carolina's governor, beverly perdue, they are leading the statewide effort to spur new business investment. while the state small business credit initiative offers states the flexibility of using their allocation to boost small business lending. north carolina has elected to invest its full allocation in the capital access program or nc cap. the rural center has a 14-year history of operating this program. in 1994, north carolina was one of the first states outside of michigan to adopt a cap program. enrolled 850 loans totally $103 million in creating or retaining more than 27,000 jobs. this was accomplished with an allocation of 3.6 million from state appropriations and other sources. today thanks to the small business jobs act.
12:03 am
nc cap has been launched on a larger scale. they will receive $46 million that enable up to $800 million to over 10,000 businesses in our state. nc cap is a voluntary loan loss reserve portfolio insurance program. eligible lending institutions, banks, cdfis and federally ensured credit unions elect whether to participate. the program allows the bank to mitigate the risk with the small business lending. for loans enrolled in the program the borrower and/or lender pays a fee of 2% or 7%. it's deposited into that loan loss reserve account. as more loans are enrolled, the reserve pool grows. in the event of a default on an nc cap loan, the lender may draw down the reserve pool to cover the loss. lenders are solely responsible for underwriting the loans and defining terms. loans may be used to buy land, construct, or renovate buildings, purchase equipment, or provide working capital.
12:04 am
why does north carolina believe in this program? first, it's cost effective. for every $1 we invest, investor will typically loan $20 to small businesses. second, it's non-bureaucratic. paperwork is minimal and seamless to the borrower. not only do we draw upon our own experience, but more than 30 states have successfully operated cap programs. last december, north carolina joined michigan as the first two states to apply under the state's small business credit initiative. in february and early march, the rural center held 11 briefing centers across north carolina to roll out the program. these briefing sessions drew hundreds of participants including banks, other lenders, technical assistance providers and small business owners. today, 26 lenders, including 23 banks, two cdfis and one credit union have enrolled in nc cap. these 26 lenders represent 30% of all branch bank locations in the state giving the program
12:05 am
statewide coverage. another 15 lenders are in the process of signing up and we continue to recruit others. our staff has made face to face contact with each of north carolina's 130 banks as well as our credit unions and cdfis. north carolina enrolled the first loan in the country using the federal allocation. at this early stage, we have 16 loans enrolled, including loans for restaurants, logging, and air cargo businesses. we anticipate a rapid escalation in enrollments. and in the next three weeks, we will embark on a statewide publicity campaign. the leadership of several important partners is noteworthy. senator kay hagan who gave her support to this legislation, our governor who seized the opportunity afforded to our state by the state small business credit initiative, bb & t president and ceo kelly king who embraced and promoted the program to his fellow ceos, as a former chairman of our board of
12:06 am
directors, kelly was instrumental in bringing the program to north carolina originally. we also appreciate our partners at the north carolina department of commerce and the sbtdc and in the state small business credit initiative office at u.s. treasury. they've been very responsive to our needs and helping to ensure the success of our efforts. our state has suffered severe losses from the recent recession. now as we began to see signs of an improving economy, this new program is finding its legs. it couldn't be happening at a better time to stimulate the business and job growth we desperately need. thank you. >> thank you so much. i'm so excited to hear about your success. and also senator levin was very instrumental having some experience in michigan, of
12:07 am
course. so let me ask you this too, again for the record. 271,011? did the program go away program ? >> the program did go away for a period of about four years. >> and despite its success? >> well, despite its success, our primary funder had become the golden leaf foundation. and the real reason it went away was as it came time to raise the third round of capital for the program, their priority is investing in tobacco dependent and economically distressed counties. and about 2/3 of total loans were being made in the 15 urban counties in north carolina. and just their priority as a funder did not -- it did not meet their funding priorities. therefore, we did much to the disappointment of several of the banks that participated, we shut down the program for a period of four years. we began looking early in 2010 as this opportunity looked like legislation was taking place that might include a provision
12:08 am
like the state small business credit initiative. we started looking very early on at this as an opportunity to start to restart nc cap on a much larger scale. scale was one of the issues with the earlier program. we had a very small amount of capital. banks are very reluctant to -- even though it's a great tool, it works very well for them. it's difficult to get banks to invest heavily in a program if they're not sure how long it's going to be around. the authorization if the staff will remind me for our program is five years for this? what is our authorization? five years. so we hope that will give you some stability for the start-up of this. and we are really going to be looking at how this works.
12:09 am
because we are just desperate, literally, to find models that work for people like mr. blinderman who couldn't do more in terms of what america expects its young people to do other than going to school, graduating at the top of their class, getting the extraordinary degrees. yet, when they go out to start a business, there's no capital for them to start. and we wonder why this recession is, you know, why we're having difficulty putting in our rearview mirror. so we're trying it all. all of the above. and i'm excited about the program in north carolina and potentially we could have a field hearing there at an appropriate time to really showcase what you all are doing. and we're anxious to hear what michigan is doing, as well. let me ask, you testified you're happy for the smallest businesses in america to be on a level playing field with the largest. and you realize the financial constraints that we're under.
12:10 am
what do we estimate it would cost to try to put these small businesses on an equal playing field? what are the most recent estimates? and do you have any suggestions about how we might step into that over time for the record? >> you know, beguagain, this one-year tax provision was a good start. it will allow us to see the effectiveness of this deduction. again, it's up to the business owner to take full advantage of the deduction. i do think we would get better utilization if the irs more effectively implemented the deduction as mentioned putting that deduction on schedule c where all other business expenses currently lie. there are 23 million self-employed americans who qualify for this particular tax benefit. and again, in terms of qualifications, they simply have to be self-employed, schedule c filer, and they have to purchase their own health coverage. so anyone who meets this
12:11 am
qualification should take advantage of this. in terms of cost, this bill, you know, we for years have promoted legislation to address this inequity permanently, and the bill has been scored at $2 billion to $2.5 billion a year over ten years. again, it's in complete correlation to the number of self-employed people out there purchasing their own health care. so the smaller the number of self-employed out there purchasing health coverage, the less people qualify for the deduction, the more people qualify for the deduction which would address how much it costs. but again, at the end of the day, why is it okay for the smallest businesses out there to pay more into the tax, you know, more in revenue, more in taxes than larger businesses? why is it okay that a large business gets to deduct their health care costs that workers of large businesses gets to pay for those health care costs with pre-tax dollars, but someone who is a one-person business, self-employed, who needs the
12:12 am
most assistance has to pay more in payroll taxes than anyone else. it's a fairness issue. and in this economy, that money is even more important because every little bit counts. >> thank you. and finally, mr. blinderman, your story is exactly what we had hoped for when we passed the small business bill. could you restate for the record what you think your business in terms of its contribution to the local economy, in terms of taxes that you're paying employees. you mentioned something about suppliers. would you state for the record the far reach of your successful small business? >> i think to answer that question, it's best to understand the model of my existing restaurant. currently we have 35 employees, and we generate over $3 million per year in gross revenue. of that is fully taxable as income as an llc pass through to all the owners and investors of
12:13 am
the restaurant. in addition, all of our 35 employees are paid on the books in the restaurant industry, people are aware that often times tipped employees are paid out in cash each night, that doesn't happen. everyone receives the cash that comes in each night or credit cards, it's deposited into the banks, funneled through our payroll company, payroll taxes are deducted, medicare, medicaid, social security, our payroll averages between $23,000 to $28,000 per week. translating those numbers into a bigger restaurant that will employ more people. our projected revenues conservatively if we're able to meet our numbers would generate anywhere from, again, $3.2 million to $3.7 million more revenue, which would be fully taxable by federal, state, local authorities. in addition, if you take the $23,000 to $28,000 we spend in
12:14 am
payroll each and every week, you can effectively double that and perform the calculations to determine social security, medicare, medicaid, and other entitlements which will be deducted in addition to other taxes. i think most importantly, though, are the trickle down effects for our suppliers and vendors. it is built upon a model of sustainability and organic cuisine. which back in the day before it was a buzz word has been open for seven years. we source all our ingredients as much as possible within 150 miles of new york city. farmers who wouldn't otherwise be able to meet the new york restaurant environment, fisherman, growers and others, it's a revenue we will consistently transfer over whether we're buying meat, poultry, fish, or vegetables in addition to our wine purveyors, and our other vendors, our glass purveyors, cloth purveyors, our
12:15 am
laundry needs, and all of the various other entities that go into servicing a full-service fine dining restaurant. so that's the benefits that i think one can expect. and those are the benefits already achieved at mas farmhouse, which again, was a success story. >> thank you so much. and i want to submit for the record, i think that would be an excellent way to close. your time was very much appreciated. with a list of over 40 businesses. we could've filled this panel with hundreds of success stories of businesses just like yours and programs statewide and regional programs that are stepping up to respond to the new provisions in this act. so i'm going to submit for the record just a list of 40 businesses that we know of that have benefitted eight jobs, 18 jobs, 40 jobs, 10 jobs. and i could go through this list, hundreds of jobs created. but we're not going to rest on our laurels.
12:16 am
we're going to see what's working until this recession is in the rearview mirror. thank you all very much. we appreciate your advocacy on behalf of yourself and the organizations that you represent. and this meeting's adjourned. thank you. [inaudible conversations]
12:17 am
>> while the core issues of conflict must be negotiated, the basis of those negotiations is clear, a viable palestine, a secure israel. the united states the leaves that negotiations should result in two states with permanent palestinian borders with israel, jordan and egypt and permanent israeli borders with palestine. we believe the borders of israel and palestine should be based on the 1967 lines with mutually agreed slots so that secure and recognized borders are established for both states. the palestinian people must have the right to govern themselves
12:18 am
and reach their full potential and a sovereign and contiguous state. as for security, every state has a right to self-defense and israel must be able to defend itself by itself. >> you can watch the rest of president president obama's remarks on line on the c-span video library. and a few moments a senate debate on the nomination of goodwin liu to the ninth circuit court of appeals.
12:19 am
the nomination fell eight votes short of the 60 vote threshold required to and debate and move ahead. this portion of the debate is a little less than an hour and a half.e presid
12:20 am
>> madamin president. >> the senator from delaware. >> madam president i rise today rise to continue to express my views in support of the nomination of professor goodwin liu, a nominee to the ninth circuit court ofrei appeals. many different things have been set oner the floor here in recet hours and i rise to offer my comments on some of the concerns that are being debated. for once it is great to actually hear debate on the floor of thio chamber. i've been here as you no matter know madam president just six months and as someone who is ne to the judiciary committee, newt to the debate and dialogue of this chamber i am struck at the things that c i'm hearing about professor goodwin liu and theni significant diversions between what i have found in questioning him and looking at his record and speaking to my colleaguesco and in what i've heard here on the floor just today.y i will do my best if i might madam president in a few moments to try to lay out what i see as the r real record of the realr professor of goodwin liu our app
12:21 am
nominee to the ninth circuit court of appeals. some have come to the c floor today and argue that professor liu lacks the candor or the temperamentam to serve on a circuit court and as someone who clerked for the third circuit court of f appeals for distinguished judge, i will suggest something that i think is a commonplace which is thatnd candor and appropriate temperament are critical toa service on a circuit court of o appeals. a lot of these charges raised against professor liu seem to center on a few comments that professor liu made during the nw nomination hearing for now justice alito or some purportedd deficiencies in his disclosures to the judiciary committee. letisia me. >> briefly to both of those who buy my. professores liu has apologized f lengthor and in detail for the intemperate tone of one brief passage that he wrote as a part of his testimony before the judiciary committee during the hearings now some six years ago. i take this apology at face
12:22 am
value. i take his expressioni of regrer as a tone of face value, but anyone who has taken the time to meet him, to interview him andim question him i think has to dese conclude despite this one briefe episode of the use of langue, intemperate person. in fact the american barue, association as senator boxer pointed out previously today specifically considered hisamenn temperament wade gave him its highest rating of unanimously well-qualified in thecons recommendation for his consideration by this body. let me turn briefly if i mightbt to claims about candor before the committee which i believee are equally unfounded.ttee he has testified before the judiciary committee for a total of five hours and answered hundreds of questions andatio requests for additional information. he has been sharply criticized for missing some documents from his initial response to what isl a surging committee question but
12:23 am
i will comment for those following this. professor liu hasee been up proe with fake scholar and someone who has published extensively and spokente extensively and her the first controversial circuit court nominee to have hisstal te confirmation take place not just in the computer age but in thehe youtube age and a combination of cell phones and video p recorders have literallo made a recording of every brown bag lunch and every off-the-cuff by remark made by this nominee before us. the argument that anisa the r supplement the record to include some documents not initially produced in my view and somehow that reflects some lack of candor and somehow that suggests a lack of truthfulness that should disqualifyif him not vera vote but not even for consideration of a boat is wholly without merit. is a cheap the chief white house ethics counsel under president bush richard painter professor liu'sso originalaske questions asked by the judiciary
12:24 am
good faith effort to supply the senate with the information it needed to assess the i nominatie it means someone like painter concluded her vester leal provided a lot more information than most circumstances and frankly, itve seems to me over reaching to trt to suggest that simply because the youtube age, thisrovid professor who provided us withm, hours of testimony and pages of responses fail to notice the committee about some brown bag lunches and off-the-cuff comments does not rise to the jy standard of justifying ain filibuster. let me turn to the n suggestionn that he isn't sufficiently c qualified to holdir the position of circuit judge. we an important concern because wec want judges of judicial temperament of openness and candor and good character and also those who are sufficientlyi experienced. as i said a moment ago the american bar association after searchingti confidentialive revi
12:25 am
comprehensive review of thisew l golf vacations concluded he was unanimously well-qualified. his highest possible rate. in previous nomination debates senators of this body, senators of the aba rating as aeval comprehensive and exhaustive evaluation that providesed. valuable insight about to be trusted. seval several folks, m several member, of this body and severalin senators including some who spoke immediately before me have ate those exact references to a the value of the aba rating process.o reasonable minds may be able toi differ on the margins but it isy not credible in my view to claim that a candidate with professorn liu's r remarkable legal education, long record of public service and experience and the aba's highest rating is not qualified to serve on a circuit court. the charges were suggestions that professor liu is unqualified because he lacks significant courtroom experienca arels also one-sided when we lok
12:26 am
at the real record. 1 since 1984, 14 nominees hundred and professor liu advanced bydv republican presidents have all been confirmed. judgesed for example neal corses on the tenth circuit who was 38 when nominated. judge rick cavanagh and appointments and i would say friend ofoo mine from law school noun the d.c. circuit was 38am when nominated. now justice samuel alito was 39e when nominated to the thirdim circuit. republican nominees with similar or lesser practical courtroomiu experience than professor liu have also been nominated and jus confirmed. circuit court judges frankwe b easterbrook and harvey wilkerson were both under 40 when nominated without any practicing legal experience at all. pract andic yet the lack of practical experience didn't prevent either of these judges from becoming among thepe best respected most widely regarded in their respective circuits. i would ask that my colleagues seriously consider instead
12:27 am
looking at the standard that s s applied when a similarly body controversial professor camewas before thi ns body. i was not here atote the time bi understand for the record that f democratic senators approached the nomination of michael mcconnell, president george w. bush's nominee to the tenth circuit, in a way that was generous and accepted its faceso value some of his assertions. like professor lew -- liu he wai a law professor nominated to ast federal appeals court withoutge having first served as a judge. many democratic senators at the time had concerns about professor mcconnell' conservative writings which include strong opposition to roe v. wade, congressional testimony the violence against women act was unconstitutional and harsh criticism of the supreme court's 8-1 decision ins the bob jones case. despite these positions which one could argue ed at the outer ridge even edge even the extreme of illegal canon of the time. professor mcconnell waslibuster
12:28 am
confirmed not after the filibuster, not after a long series of finding nomination hearings and public discourse that professor man mcconnell was confirmed by voice vote of this chamber just one day in supporting his nomination democratic senators at the time credited his assurance that hetw understood theee difference between the role of law professor and judge, that he respected and would followhis precedent.dy sul in myd view the senators of thil body should credit similar assurances thatin professor liuf has provided during his that confirmation hearings and the professor liu has provided to me in an individual interview ananw answero to hundreds of written questions from members of the committee as well to an answer to challenges presented here. let me turn if i might to some challenges are concerns that have been raised about professoo liu's view on education.
12:29 am
group of 22 leaders s inup education law policy and research have written to support professor liu's's nomination in the field of education law and policy. they wrote and i quote, based ou his record he believe professor liu is a careful, balanced andlt intellectuallyy honest scholar with an outstanding set of qualifications and the proper temperament to be a fair and disciplineca judge. they wrote his work is nuanced and balanced and not dogmatic or ideological so i ask unanimous consent and present this letter be included in the record.nfirti >> without objection.on >> during his confirmation hearings professor liu testifie" to the judiciaryi committee andi quote i absolutely do not supportnd racial -- in my writii and i think it made very clear that i believe them to be unconstitutional. professor liu stated to the committee that i think affirmative action as it was
12:30 am
originally conceived was a time-limited remedy for pastap wrongs andri i think that is the appropriate way to understand what affirmative action is. these two statements which reflect professor liu's testimony to the committee are well within the mainstream.en professor liu has spoken about his support were diversity in public schools and in my viewtr there is nothing extreme in this view ever since brown versus board of education was decided by a unanimous supreme courtn in 1954. the supreme court of the united states united states has recognized the legitimacy of. state action to desegregate schools. in fact the supreme court upheld it as one factor in it missions decision in the 2003 case gruder versus ballenger. although some, some on the far right in the supreme court haveb argued that oath brown and router should be disregarded to the extent they recognize the permissibility of efforts to achieve diversity in public institutions it is i would argus those justice -- judges out of
12:31 am
step of with theco mainstream wh the tradition of this country. 2 and it's most recent case in point the decision parents versus seattle school district was which struck down a desegregation program, five ofth the nine justices that made up the majority opinion agreed with liu that achieving diversity remains a compelling governmental interest. a the notion that somehowesess professor liu is an ideologue oy these issues is belied by his actual record as a scholar professor liu has supported market-based reforms to promoteb schoolhouse diversity, reforms that are often labeled conservative. professor liu believes and is written in support of school choice and school voucher stating that they have avi roleo play in improving educational opportunities for disadvantaged children.dvocated he is publicly advocated thesesc programs on a nationwide scale arnie praise from conservatives.
12:32 am
the director of the conservative goldwater institute referred to by my colleague senator boxertt- previously. i have known professor liu and his rating and influential law review article he co-authored h, goes onto say supporting school choice is the solution to the crisis of inner-city publicm tot education, i believe it took a p great deal of courage for him to take such a strongos public position and i find professor liu to exhibit independent thinking and honesty.ssor he closed in his letter byly saying professor liu clearly possesses the scholarly credentials and experience to serve with distinction on this important circuit court. professor liu has in my view made very clear that he understands the difference between being a law professor, a scholar, an advocate and a judge and has assured us during his nomination hearings before the a committee and again and personal comfort stations with me that he woulwod follow the court's precedentt if confirmed.iu
12:33 am
during his confirmation hearings professor liu testified to our committee quote if i will is -- importunate have to be confirmed it would not be my role to bring any particular theory ofob constitutional interpretation te the job of an intermediate appellate judge. the duty of a circuit judge is to faithfully follow the supreme court's instructions on matters of constitutional interpretation, not anytd soha particular theory.wo that is exactly what i would do. iul would apply the precedence o the fact that each case. as i said before and i will says again, thisso quote i believe fm professor liu deserves exactly the same weight, deference and confidence and n assertions by then professor mcconnell when confirmed by voice vote at this chamber to speak otherwise i think is to do violence to the tradition of deference to those who give sworn testimony to hearings and to the deliberations of this tut
12:34 am
body.s last look me turn to some pointt race just recently about whether or not professor liu believes americans have a constitutional right to education shelter or health health health care and it. confirmed -- -- if confirmed would declare those rights from the bench. professoprr liu has offered many different law review articles and it won the 2008 stanford law review article entitled rethinking constitutionalhein welfare rights he in fact a criticized another scholar's assertion from a 1969 article that the courts should recognize constitutional welfare on the basis of a so-calledprof comprehensive moral theory. professor liud rejected that.al in 200e6 he penned a yale law review article that argued the 14th amendment authorizes and obligates congress to ensure a meaningful educational opportunity. his record is replete with sources to make it clear that
12:35 am
professor liu respects and this recognizes the role of this body of congress and the role the supreme court in establishing, interpreting and applying botht precedent and constitutional theory and that he accepts, acknowledges and will respect the veryl real limit on a circut court judge in innovating in anc way.ply mad and president and closing ts allow me to simply share with you and the members of this bodt that new to this body, new to the fights that have divided this chamber and have so i think reflected real to liberation ont nominees to circuit courts of the supreme court, i've taken the time to review his writings and interview him individually and attend the nomination hearing and have come to the, conclusion that candidate nominee professor goodwin liu is a qualified, capable, competentr
12:36 am
in fact exceptional legal scholar who understands and wild respect the differences between advocacy and scholarship and serving as a member of the circuit court and the judiciary ofta the united states. i urge the members of this body, i urge my colleagues to take a fresh look at the record and to allow this body to vote. why on earth this record of this exceptionally qualified man would justify a filibuster is utterly beyond me and suggests unfortunately we have become mired in partisanship ratherotes than allowing debate and votes onhi this floor which in my view if we follow the best traditions of this body would lead to the confirmation of goodwin liu to the ninth circuit. thank you.g offi >> adam president, i yield the floor.rn: an >> the senator from oklahoma.ld >> thank you madam president and i would tell my colleague he makes some very excellent points and very well said.
12:37 am
i have spent a number of years, now almost seven come on the judiciary judiciary committee and my observations are a painfully aware to me about our process. godwin liu is a stellar individual, there is no question about it. he is sa stellar scholar. there is no question about it. but my observation has taught me as we have voted and put judges to the appellate court in theore highest court that what is said in testimony before the committee really does not bear out any impact on what happens once somebody becomes a judge. my observation is, people are who they are.y i actually spend a significant
12:38 am
time with goodwin liu. i think he is a genuine, greati, american. the question, however, is not whether he is a stellar scholar, a stellar intellect or a greate american. thequ question is, do his belies match what the constitution jude requires of appellate judges and highers judges? and i have come to the conclusion that dean's stellar and being a great teacher and professor, being a wonderful judge is not enough. and i really think -- take the words to heart that my colleague said because we all make ali mistakes. hisnd comments on judge alito ad roberts he said were poor thi
12:39 am
judgment. thing there is not anybody in this body that hasn't been the same thing so we can can't hold that against him. but what i do think matters is whether or not the oath to the constitution and our laws, and our treaties and the our foundational documents of our constitution matter. and i believe that where we the define ourselves as a country,or not having to debate on the senate floor as we should be having the debates on the senate floor, is partially to blame because of where the judges have puts us.th that they have not been loyal to the document. they have expanded the commerce clauseth well beyond it's anywhe close intent in the general welfare clause that now finds us at a time when we are nearing
12:40 am
bankruptcy. our we can't get out of our problem without retracting tremendously the size and scope of thern federal government. we can't grow our economy with the tax revenue increases thatut are going to be required to get out of this problem, that it comes back down is what it gave really believing about thethey constitution? the best way to find that out is before they ever thought aboutaf beinorg nominated and before thy were trying to be controversial environment, is what were their great dots and. what are their beliefs? and, i don't believe her bessert writes articles to be controversial.icle i think they write articles based on what they are learning, research tells them and i just have a disagreement with professor liu on the role of at federal judge. i actually believed what the
12:41 am
constitution says and it says the judicial power arising under this and the word is this, constitution the law of the united states united states and the treaties made or which shall be made.s i the problems i have with l professor liu is that i believee he is advocating for a non-constitutional nonconstitutional role for judges. the he believes the constitution is aiv living document, that it ise indeterminate. you know i recognize i am just a doctor from oklahoma and i don't have a law degree but i can rea, these words as plain as anybody else and i don't think they are and determined. like ian think some of the things our founders did were wrong and we have corrected them through the years, both through why supreme court decisions but also through amendments to the constitution, and he also believes that the constitution should be subject
12:42 am
to socially situated modes ofg t reasoning that appeal culturally and historic weight to contingent meanings.t ss what that says to me is, what ss this says is wide open, and i really like the guy. i got a long fabulous with him. he is a wonderful individual, wo but i don't think that is who we want one the appellate court. and i think when potential judges say it right, when you take the totality of what they say and h write, not what they o the hearing. it all changes once they are nominated. what they say and write is verye important about what the judge is going to become. and you heard senator cornyn relate, justice sotomayor basedr on here is the testimony in the first issue does is exactly the
12:43 am
opposite of what her testimony said.judiar so, the judiciary committee did not ring the judges before. let me address something else. what the aba says does not matter to me anymore because there has been a controversial nomination from oklahoma, that four distinct people who were interviewed by the aba said the individual wasn't qualified. that was totally discounted by the aba. the people that were actually interviewed said the person wasn't qualified. the aba gave him a qualified rating anyway. these are theire peers. so, that racist for saying we have qualification is no longery trustworthy in my mind and it hasn't been for somen' time. dig i think the due diligence is lacking on the aba.
12:44 am
and their method for scoring who is qualified or who is not. fin the final point that i would have made is that although he has w written a lot of -- a lotf it has been controversial, oneen of the things that really bothers me is his profound belief that he has the right to use foreign law to interpret the u.s. constitution. and what that really is a code word for saying if i don't likel what is written in this document i will go find some jurisprudence somewhere else and apply it to the stock meant that gives me the results i wantthati rather than being truthfully and honestly obedient to what thiscu document says. and i know that sounds overly not.e but it is the fact that we are not applying our constitution and or its meaning and what our founders said about what it meant and we are ignoring it is
12:45 am
one of the us in the perilous state we are inte today. we're and we are going to have a great test sometime in the next year on the massive expansion of the commerce clause that was putxpan into law through the affordable care act. and i will predict in this bodya today, there will be no need for state and local governmentsmi anymore because there will be nr limitationnm on what we as a t federal government can do to limit the freedom and free exercise of the 10th amendment to the states. the idea that you can take what this constitution very clearly says, all cases in law equity arising under this not foreign law, not foreign but
12:46 am
constitution, not foreignoe thought that our love.ther doesn't mean we can't learn from other things but you can't use foreign law to interpret our constitution.it it is a violation of a judicial oath every time one of our supreme court justices references their opinion based law.reign it is a violation of their both because they're both is to this constitution and not some other constitution, so we see that mit occasionally especially andd minority opinions and oftentimeh in previous majority opinionsavb that have got our country and the trouble we arelen. in. so i believe goodwin liu is a generally wonderful man. he is has a stellar intellectuas thinker. by reports he is an outstanding professor, and is a great humani being. that does not qualify him to beo
12:47 am
on the ninth circuit court of appeals. him what will qualify him is an absolute fidelity to our constitution and our future and not that creative ways we can or change that you are on the pills or clams up judges to get a result that is different fromav what our constitution should say we should have. ie. regrettably, and truly with regret, will be voting against cloture because i don't like this process. i think it hurts us and i think it divides our body for his nomination. my hope would be that we can handle these in the future much better than what we have handled in the past and with that i yield to the assistant majoritye leader on the floor and i woulde yieldnt to him.mr >> madam president? >> the senator from illinois.. >> madam president i have 10
12:48 am
unanimous request consents for the majority leaders and i ask consent these requests be agree to andte printed in the record. >> without objection. >> madam present at 2:00 we will have a vote here oatn the floore of a man who is seeking a judgeship. there's no question in anybody's mind that this is a judgeship that should be filled. professor goodwin liu wants to serve in the u.s. circuit court of appeals for thels ninth circuit. he was nominated in januaryre i january 2009. here we are in may of 2010. the significance of that delay is the fact that this is a vacancy that causes a problem. the administrative office of the u.s. court, no political office but the court's office, declared a judicial emergency in this circuit and saidd they needed this vacancy filled.hat ther nobody questions that there was at least a sense of urgency and filling the seat and you ask
12:49 am
yourself if the president nominates someone back in january of 2009, y. in may of 2010 are we getting around to it? i think that question needs to be directed to the other side of the aisle. they have found reasons to delay this and to raise questions which have brought us to thisut moment. so how about this professor? is he qualified to serve as thel second-highest second highest level of courts o in america, te ninth circuit? the american bar association did not waste any time evaluating professor lew.poss they unanimouslyib well-qualifil if you look at his background it is no surprise. he is a son of immigrants. he attended stanford university stanford university where he graduated phi h beta kappa. he won a rhodes scholarship ando attended yale law school where w he is editor of the yale law review. he served as a law clerk to
12:50 am
judge david to tell of the d.c. circuit and supreme courtsburg. justice ruth bader ginsburg.ksh, after finishing his second clerkship, c the one with the supreme court, he worked for years at the law firm ofs o'melveny and myers inth washington and then he joined the faculty at the university of california burke we law school. he has won numerous awards forsc his teaching and academic scholarship including the highest teachingrss awards givet the law school.nt so what is the point of thiswe debate? we know he is well-qualified. we know there is a judicialill s emergency that requires us to fill the seat and we should have done it a long w time ago, and when you look at his resume, it would put every lawyer including myself, to shame when youn consider all he has done leading up to this moment in his career. it turns out those who oppose him don't oppose his qualifications. they think that he has the wront philosophy, the wrong values.hio
12:51 am
they criticize him for a handful of statements he made while he served as a professor.tinghe isn't it interesting the double standard that is beingg applieds here. i was here in 2002 when a tenth circuit court of appeals nominee by the name of michael mcconnellco was up to be t consider. he had been a law professor at the university of utah and the universitysi of chicago. at his nomination hearinged senator orrin hatch who strongly supported his nomination said in a quote, i think we should praise and encourage the prolific exchange of honest and principled scholarly writing.ly assumingit such scholars know te proper role of to interpret the laws written and to followge precedence. well, what's with senator hatch defending and professor mcconnell'sne background? it was the fact that he had called roeoe v. way -- wade illegitimate. professor mcconnell had
12:52 am
defended bob jones university's racist policies on the grounds thaton they were quote churchreu teachings"rt mac even though thi supreme court rejected his 8 argument i-1n an 8-1 decision ad he claims that violence against women act was unconstitutional.f now that was fodder for a lot of questions that should have been asked and were asked.y exem he had made some very extreme statements as a professor, but t professor mcconnell assured the senate than when he left the classroom and entered the courtroom he put his views aside and follow the law. the senate did not stop him with a filibuster. the senate's at this or mcconnell at his word and gave him an up-or-down vote on the floor and he was confirmed.th that is all we are asking for when it comes to professor liu. i point out that other well-respectedot federal judges have also served in academic
12:53 am
roles before coming to the bench. richard posner, seventh circuitf in chicago, is a friend of mine and every once in a while to get together for an amazing lunch. he is such a brilliant guy. we disagree on so many things but i can't help but sit there in all of this man's knowledge of the law and of the world and his prolific authorship of books on so many subjects and i think most would agree he has taken some pretty controversials vie0 himself. in a 2005 debate on civil liberties with geoffrey stone, judge posner said life withoutu, self-incrimination clause without the t miranda warnings, without the fourth amendment win exclusionary rule of to ban amended patriot act with a depiction of the 10 commandments on the ceiling of supreme court even roe v. wade wouldmy my opinion he eminently worth living. is there any fodder there for politicalli commentators? he was a sitting judge when heud
12:54 am
said that. similarly friends on the left could've had a field day with that d quote. sum all my friends on the the right mida disagreed strongly with judge posner's 2008 when he wrote about the 2008 supreme court decision in d.c. versus heller a case where the court stated the second amendment right tohe bear arms confirms an individual right. judge posner wrote the decision is questionable in method and result and it is evidence the supreme court in deciding cases exercised eighth pre-willing discretion strongly flavored with ideology and a quote.er i will bet you there are a lot of senators on the other side og the aisle who disagree with that quote so let's get down to the bottom line here. we recognize the value of d academic freedom and discourse. we understand a professor is a n different role than someone sitting on s a bench judging a case. we trust them and we give them basic credit for integrity whent
12:55 am
they say they can separate the two lines. they understand the two responsibilities. for besser liu is a man widely recognized for his integrity and independence. that is why he has the support of common a conservativecrat s lawyers.ha kenneth star,s no hero on the democratic side of the aisle, has said he would be aat great p judge. akbar former pub and congressman the goldwater's attitude director clint bolick expressed support for liu's nomination. effect ken starr and akhil amar wrote in a quote in our view the trade issue weigh heavily in a evaluation of extraordinary qualified nominees which isly gd plan or professional integrity and the ability to discharge faithfully and abiding duty to follow the law because goodwin possesses these qualities to the highestal degree. they wrote we are confident he willer serve on the court of appeals not only fairly and c confidently but with great distinction. we support and urge his. >> he confirmation, and that
12:56 am
quote. we are not going to meet their wishes with a. >> he confirmation. the question is whether or not 60 senators will decide today that professor goodwin liu is entitled to a vote, a vote, an up-or-down vote in the united states senate. in professor liu said in his confirmation hearing the role of the judges to be a partial objective and neutral arbiter oo specific cases and controversy c that come before it.on c the way that process works is w through absolute fidelity to the applicable precedence of ther language of the law and statutes or regulations that are issued in this case. professor liu has committed to respect and follow the judicial role. i'm confident that he will fulfill that role with distinction. this is a good man, a great lawyer and an extremelyualifi well-qualifieded nominee. his nomination has been languishing before the senate since february of this year. had
12:57 am
he has had to put his life on hold in many respects waiting foser the senate to act. act. we will have his cloture vote it just about one hour. i think we know what is going on here. t for many on the other side of the aisle, they are guided by advisers who tell them, keep as many critical judicial posts open for as long as possible. help is on the way in the next election. we don't want to allow this president to fill these vacancies and particularly when it comes to the circuitau courts because of the tremendous responsibility and opportunity there is for important and historic decisions. and so professor liu has been caught in this the this mel strom. he is now going to be subjected to this filibuster vote. i sincerely hope my colleagues will be fair and honest in their voteil. i hope they will look at the obvious record of this man to fill an important vacancy, a man found unanimously well-qualified
12:58 am
at the american bar association, person with a legal resume that is peerless, someone he stated unequivocally that he will follow the law to dwell on statements that he has made isaa professor is to do a great disservice to academic freedom and to ignore the obvious.we we have when republican nomineeo came before us use their discretion to separate out their academic lives with their promise that as judges they will look at the world in a very sober and honest way. i intend to vote in support of his nomination i urge my colleagues to do the same.sena matta presidentto i yield themr: floor. >> the senator from utah. >> several of my colleagues have expressed concerns about thei se nomination of goodwin liu. i share many of those concerns and to not wish to believe -- m belabor the point. c will limit my comments today to two fundamental reasons why i am
12:59 am
myself unable to support the nomination of professor liu. to serve as a judge on the u.s. court of appeals for theof ninth circuit. first time truly dismayed by thr lack of judgment displayed andny professor liu's 2006 testimony regarding the confirmation of samuel alito as an associate justice on the united states supreme court.ce be throughout extensive written testimony and during an appearance before the senate judiciary committee, professor liu unfairly criticized andy ato judge alito and his longer traditional record is amongrn o other things having shown quote a uniform pattern of excusing errors and eroding norms of basic fairness." in particular in the final paragraph of her besser liu's written testimony which served as a summary of this entire analysis on then judge alito was nothing short of an inflammatort attack. he rode quote, judge alito's
1:00 am
record envisions an america where police may shoot and kill an unarmed boy to stop them from running away with a stolen purse. where federal agents may point t and said ordinary citizenstanc during a raid even after no sign of persistence and where the fbi may install. a camera.nles where do you sleep on a promise that they won't turn it on unless an informant is in the broom or wear a black man may be sentenced to death by an all-white jury for killing a liu white man.usti professor liu's unseemly attack on justice alito generated considerableid attention at thea time. as well as understandable concern about professor liu's a temperament, his judgment and his basic ability tond be fair.e so far as i know it was onlyec after he wasom nominated to be,s judge on the u.s. court of appeals for the ninth circuit that professor liu offered any. apology for his testimony aboutr justice alito.u just a few weeks ago professor liu tolde members of the judiciary committee that he had learned fromom the out --e l outrageouse remarks that strong
1:01 am
language like that is really not helpful in the process. .. his comments about justice alito were offensive not simply because they were unhelpful in his confirmation process but because they were misleading and they were an unwarranted personal attack on a dedicated judge and public servant. professor liu's treatment of justice alito and his last-minute and incomplete handling of the concerns raised by his remarks lead me to believe that he lacks the basic judgment and discretion necessary to be confirmed to a life tenure position in the judiciary. the second reason i feel compelled to oppose this nomination has to do with the integrity of our nation's system of constitutional government and the rule of law. in my careful and considered judgment, the judicial judgment, the judicial >> is fundamentally inconsistent
1:02 am
with the neutral mandate tore an arbiter of the mandate and uphold the rule of law. i do not base this conclusion based on the fact his approach to the law is in many respects different from my own of the that's not a prerequisite or basis of my opposition to this nominee. most of the candidates nominated by president obama do not share my commitments, yet in my short time as a member of the senate, i have voted to confirm many nominees with whom i fundamentally disagree. professor liu by contrast is not a progressive nominee with a somewhat more expansive view of constitutional interpretation than is common among many judges, nor is he one whose remarks are few and can be overlooked given a long history of mainstream legal practice and observations. throughout the course of his
1:03 am
numerous speeches, articles, and books, professor liu championed a philosophy that in my judgment is incompatible with faithfully discharging the duties of a federal appellate judge in our constitutional republic. his approach advocates that judges go far beyond the written constitution, statutes, and decision of law to incorporate into constitutional law and many professor liu's own word, evolving understandings, social movements, and collective values. in a 2008 stanford law review article describing the judicial role, he wrote, "the problem for courts is to determine at the moment of decision whether our collective values on a given issue diverged to a degree they can be crystallized and absorbed into legal doctrine. in so framing the process of judicial decision making, he
1:04 am
advocated an exception of the judiciary as a "culturally situated interpreting of meaning." in a 2009 book called "keeping faith with the constitution," he wrote that the constitution and constitutional interpretation rightly "incorporates the evolving understandings of the constitution forged through social movements, legislation, and historical practice." in an interview later that view, professor liu suggested that the judicial role is an individual process including, "lessoned learned from experience and an awareness of the evolving norms in social understandings of our country." these are just a few examples of a clear, consistent, and extreme approach professor liu championed in many settings over the course of many years. his approach necessarily requires a judge to separate separation of powers principles making subjecting understand k
1:05 am
of communal values, trends, or personal professors rather than faithfully interpreting and applying the laws made by the legislative and executive branches. a judge who served in the role in which professor liu was nominated and as a result is familiar with the very real dangers of legislating from the bench shared this, "it is as important to freedom to confine the judiciary's power to its proper scope as it is to confine that of the president, congress, and state and local governments." indeed, it's more important for courts not called to account by the public." i rise today in defense of our nation's constitutional separation of powers and ultimately in defense of the essential liberty that it protects. i also feel the need to respond to the point made by my distinguished colleague, the
1:06 am
senator from illinois, moments ago. 24 is not an -- this is not an opposition based on a disagreement with the particular set of legal analysis. my colleague from illinois noted that there was some opposition to journal mcconnell served by this body and on the 10th circuit not without the fact many in the body greed with conclusions reached by then professor mccornell. this is not a disagreement with the conclusion. it is instead about a concern rising out of a systemic broad-based sprerptive approach -- interpretive approach, one i believe doesn't give due belief to the interpretation of law, one that are laws consistenting of words, that words have defined finite meaning, and that in order for our laws to work properly, that meaning needs to be respected, and it needs to be interpreted in and of itself and
1:07 am
held as an independent good by the judiciary on a consistent basis. professor liu's appalling treatment of justice schee toe leaves doubt, and i've come to the conclusion that there's extreme judicial philosophy is incompatible with the judge in our constitutional republic. for these reasons as well as those articulated by many of my colleagues, i'm compelled to oppose this nomination. thank you. >> madam president? >> the senator from kentucky. >> i thank the chair. madam chair, i rise to support the nomination of goodwin liu to be a member of the court of appeals of the 9th circuit. i believe his academic qualifications, strong intellect, character, his
1:08 am
temperaturerment -- temperament make him a valuable addition to the federal bench, and therefore i urge my colleagues to vote for cloture and then in favor of his confirmation. professor liu brings an outstanding academic and professional background to the nation and a personal life story that is qint sensually american, it's not a reason in itself to confirm in as a judge in the high court, but it speaks to the endless opportunities for upward mobility in this country for people who work hard. where you end up is not determined by where you start out in this country. goodwin liu is the second son of immigrants. as a young boy, his family settled in sacramento. he worked hard from the beginning u.ly graduating from stanford university, received a
1:09 am
road scholarship to oxford and eventually graduated from yale law school. should he be confirmed, he would be the second asian-american currently serving on a federal appeals court. he is now the associate dean and professor of law at the university of california berkeley school of law. he's widely recognized and respected broadly throughout academic and legal communities in the united states. i note that prior to entering ac academia e he was a lit litigator here in washington and a clerk for both circuit court judge david patel and supreme court justice jinsberg representing different points on the spectrum serving them both i know with great distinction. though i do not agree with everything that goodwin liu has
1:10 am
ever written or said, his views, it seems to me, have been well expressed and well reasoned and quite intelligent. i think he's got a thoughtful approach to complex legal questions, and i'm impressed he's earned the respect in support of thinkers and lawyers from all sides of the legal ideological spectrum which i think speaks ultimately to his personal, even handedness to the power of his up tell elect into what we can expect of him as a judge of the circut court. i was particularly impressed, and i know it's been quoted before, but it speaks volups by the comments of the former judge, ken star and former dean said, "he's a person of great intellect, accomplishment, and integrity and is well-qualified to serve on the court of
1:11 am
appeals." madam president, i know many of my colleagues have concerns about the nomination, about things professor liu has written or said, and i understand those. i read the statement made of the judge with a passionate litigator making an argument with probably more zeal than he, himself, appreciates as he looked at it in the aftermath, but for those who have concerns, i urge my colleagues to vote accordingly on our up or down vote, not to sustain this filibuster and therefore prevent an up or down vote on this nomination. madam president, i always felt that in our advice and consent role, the president, by his election earns the right to make
1:12 am
these nominations. we don't have to decide in confirming a nominee that we would have made this nominationment only that the nominee is acceptable -- is within the range of those acceptable and capable of doing the job for which he's nominate ed. not so long ago, 2005, there was a move to reduce the right to filibuster an acquire 60 votes particularly with regard to supreme court nominees, but others as well, and that led to the formation of the so-called gang of 14. i was proud to be a member of that group, and we reached an agreement, one of whose parts i want to read now. a future nominations, this is one of them. goodwin liu, they will exercise speedometers under the -- responsibilities under the united states constitution and good faith. nominees should be filibustered under only extraordinary circumstances and each must use
1:13 am
his or her own discretion and judgment in determines whether such circumstances exist." that's from the agreement of the gang of 14. i just -- i just don't think these are extraordinary circumstances here when you consider goodwin liu's intellect, his varied background , the character he has, and this broad range of endorsements from people. to me, a disagreement about a statement made in the heat of an argument or even the substance of an article published is not strong enough to prevent this nominee from having what i think is his right and president's right to get a vote up or down, not to block him by requiring 60 votes, so i urge my colleagues to vote for cloture, and i'll do so with a full measure of
1:14 am
comfort and confidence about the kind of judge goodwin liu would be, but really with a full measure of comfort that i'm exercising my responsibility under the advise and consent clause as i've always seen it including as it has been informed by my proud participation in the memorandum of understanding of the gang of 14 in 2005. madam president, i thank you very much, and i yield the floor. >> madam president? >> the senator from south carolina. >> thank you, madam president. i would rise in regretful opposition quite frankly having to vote to deny cloture for judicial no , ma'am 1993. i also -- nominee. i also was in the gang of 14, and the whole effort was to make sure the senate follows historical norms, and that is giving great difference to
1:15 am
presidential selections when it comes to judiciary. to my conservative colleagues, the best way to get conservative judges is to wipe elections. if we start blocking all the judges we don't like that have a different view of the law than us, our friends on the other side will return the favor, and you wind up having a chaotic situation. there's a reason that judge ginsberg got 90 something votes. it used to be the way you did business around here when the president won the election, they were able to pick qualified nominees for the court and unless you had a darn good reason, they went forward. i think that should be the standard. to me, i give a lot of difference. it's not one speech. it's not an article. justice sotomayor who i voted for made a speech that she has thought the experience of la tee
1:16 am
know -- latino people were more qualified. that bothered me, but she explaibed herself and based on how she lived her life, she was a fair person that did not represent bigotry on her part towards white males, and we all make statements and write articles and get in debates, and i'm not using that as a reason to disqualify someone from sitting on the judiciary. i don't want that done to our no , ma'am sees, -- nominees, and i don't intend to do that to the other side. when a conservative wipes the white house, -- wins the white house, you expect people like robertson, alito, and scalia. you also expect people like ginsberg and sotomayor. that's the way it works, and all of them are well-qualified.
1:17 am
they just have a different approach to the law, but there are a lot of 9-0 decisions. the one thing that would -- that drives me thinking here is that mr. liu chose not in a article that he wrote as a young man, not in some debate that got carried away, but to appear before the judiciary committee and basically say that judge alito's philosophy would create an america where police may shoot and kill an unarmed boy to stop him from running away with a stolen purse. that line probably comes from some case that judge alito was involved in where federal agents can point guns at ordinary citizens in a raid even of no sign of resist tense or the fbi can install a camera where you
1:18 am
sleep on the promise they don't turn it on unless an informant it in the room or a black man can be sentenced to death by an all-white jury of killing a white man. these statements about judge alito and the decisions he's rendered in his philosophy are designed to basically say that people who have the philosophy are of judge alito are uncaring, hateful, and really should be despised. that is a bridge too far because i share judge alito's philosophy, and we may come out at a different result on a particular case, but i don't think i fall into the category of being hateful, uncaring, and someone you should despise. these statements given to the judiciary committee were
1:19 am
designed to inflame passion against judge alito based on his analysis of cases before him during his judicial tenure, and if that's not enough, justice roberts' record according to mr. liu suggests that he has a vision for american law, a right wing vision antagonistic vision of important rights and protections that we currently enjoy. it's one thing to debate your opponent. it's another thing to have strong opinions, but this is not an accidental statement. this was calculated, delivered at a time to bring maximum damage, and all i'm saying of future nominees, i expect president obama to nominate people of a liberal judicial philosophy. i do expect a -- do not deny you
1:20 am
access to the court because you may have said something in an article i don't like or represented a client i disagree with, but the one thing i will not tolerate is for a conservative or a liberal person seeking a judgeship to basically inpiewn the character of the -- impugn the character of other way of thinking. these words are not that of a passionate advocate who may have gone too far in my view. they were designed to destroy, and they rang of an ideolog, and she should be run -- he should be running for office, not sitting on the court. there's a place for people who think this way about conservative judicial philosophy. run for president, run for the senate, don't sit on the court. because the court has to be a place where you accept
1:21 am
differences, you hash it out, you render verdicts, and based on the way he views justice alito and roberts and his distan for their philosophy, i do not believe he could give someone like me a fair shake, so at the end of the day, i ask one thing of my democratic colleagues, i will try my best to make sure the senate stays on track, and that we do not get in the road of filibustering judges happen hazardly based on the fact it's something we don't agree with. i tried my best not to go down that road because it will destroy the judiciary and destroy the senate. if you're a conservative in the future wanting to be a judge, and you come before our committee when a liberal nominee is before the committee, and you question their patriotism and
1:22 am
you suggest that they are hateful people who should be despised for their philosophy, then i will reppedder the same -- render the same verdict against you. we want people in the court who are well-rounded, qualified, who understand that america is a big place, not a small place, and mr. liu's world, i think he has a very small view of the law. those on the other side who think differently, not should be engaged intellectually or challenged through academic date. he's tried to basically rip their character apart, and he will not get my vote, and a conservative who feels the same of liberal philosophy would not get my vote either. i'm looking for the model of
1:23 am
migeul who was poorly treated wrote a letter about justice kagan and we don't agree on the well, but she's a well-qualified person deserving to be on the bench. that's the way liberals and conservatives should engage each other with the judicial nomination process. this was a bridge too much for lindsey graham. i yield. >> mr. president? >> senator from iowa? >> i want to inquire how much time is on our side? >> three minutes and 45 # seconds. >> okay. my objections can be summarized with five areas of concern. his controversial writings and speeches and philosophy, lack of judicial temperament, troublesome testimony, and a lack of candor before the
1:24 am
committee. i would hope that the president would draw the nominee and send up a consensus nominee. we, on this side, demonstrated over and over again our cooperation in moving forward on consensus nominations. the president needs to nominate a mainstream individual who understands the proper role of a judge. nominees who would bring a personal agenda and political ideology to the courtroom will have great difficulty in being confirmed. i have trouble with a statement that's been made that the court of appeals is where law is made and we need the plainness minds in the world for that. first, intellect is an important element that we ought to consider in any confirmation process. this nominee has an outstanding academic record. his up tell elect is not the
1:25 am
issue. the nominee himself noted there was more to being a judge than intellect. he said this with regard to chief justice robert's nomination, "there's no doubt roberts has a brilliant legal mind, but a supreme court nominee mob evaluated on more than legal intellect." that's the end of the quote. he then voiced concern that with remarkable consistency throughout his career, roberts had applied his legal talent to further the cause of the far right. mr. liu went on demonstrating a lack of judicial temperament to disparage the view on free enterprise, property, and limited government. in my statement yesterday, i made my views very clear on how i feel about mr. liu's remarks. intellect is one component. using mr. liu's standard, a
1:26 am
nominee must be evaluated on more than legal intellect. he does have a fine intell legislate, but used his talent to promote views far out of the mainstream. shortly after president obama was elected, he said, "now we have the opportunity to actually get our ideas and the progressive vision of the constitution and of the laws and the policy into practice." i will not give mr. liu that opportunity. a second problem i have with the statement is the assertion that, "the court of appeals is where law is made." we have heard this view before. while serving as a circuit judge, justice sotomayor stated that the court of appeals is, "where policy is made." now, i understand there's elements of our society who wish this were the case, those who
1:27 am
can't get their policy views enacted through the legislative process as our constitution requires often turn to the courts, but i reject that notion. the constitution rests legislative power in the congress, not the courts. judges are simply not policymakers. unfortunately, this philosophical disagreement occasionally finds its way into debate on nominations, but let me remind the senate where this started going back to the nomination of william link gist in 1971. fortunately, this is a rare occasion. there's been a total of 46 cloture votes, including this one, on 32 different judicial nominations in american history. of the 32 judicial nominees subject to cloture vote, 22 were against republican nominated
1:28 am
judges between 71 #. in the year 2000, there were 11 votes, and most filibusters attempted by democrats were unsuccessful and cloture was invoked, however, beginning in 2002, senate democrats changed the rules. >> the time expired. >> i ask to put the rest of my statement in the record and ask for an additional opportunities to put documents in the record in opposition to the nomination. >> without objection. >> mr. president? >> senator from vermont. >> mr. president, i ask concept my full statement is part of the record. >> without objection. >> and this is part of the record. i listened to a lot of the debate about professor liu, and having him on the hearings and met him and gone through the whole record, i sometimes wonder who this is everybody's talking
1:29 am
about. it's not the man i heard from, the man who unlike speeches we can all make of a man testifying under oath and had to speak candidly and honestly about his positions. here's a man admired by legal thinkers and academic scholars across the political spectrum, and that shows he's spent his career in public service, private practice, and the teacher since receiving degrees from stanford university and yale liewl, a road scholar, and giving him support and among lerts to be put in the record, we have one from kenneth star, the former solicitor general during george hw bush's administration and also for those who may have forgotten the
1:30 am
independent counsel investigated president clinton during the clinton administration. he and distinguished professor carroll wrote it is our privilege to speak to his qualifications and character. his favorable action on nomination. in short, he is a person of great intellect, integrity, and well-qualified to serve on the court of appeals. he left ac deem that to pursue public service. we then heard from the directer of the conservative goldwater institute named after a former colleague of mine. he said after reviewing several of his academic writings, i find professor liu to exhibit fresh thinking and intellectual honesty. he clearly possesses the credentials and experiences and
1:31 am
i put in a number of other similar things from republicans and democrats across the political spectrum. after law school, he acquired for dc sir cult judge david patel and ruth ginsberg. you know, don't question him, his intellect or qualifications. he should be treated with respect and admired, no characterized. he should be credit rather than ignored. the son of immigrants, and he would bring much needed diversity to the federal bench. there is no asian-pacific american judge on the 9th circuit court of appeals which, of course, includes california and hawaii and a number of
1:32 am
western states, but rather than debate or vote for him or vote against him, a cloture vote. that means you vote maybe. most americans vote yes or no, and whether that up or down vote, the republicans argued just a few years ago every nominee deserved and there to file cloture on this. you know, the senator, many of whom are still serving on the other side of the aisle, claim to subscribe to a standard that prohibits filibusters of no , nominees except under extraordinary circumstances. there is no circumstances here. he was supported by his home state senators, favorably reported by the majority of the
1:33 am
senate judiciary committee and in particular emergency of the 9th circuit. we have a lot of judicial nominees who come through here. i may disagree with or voted against, but we pulled out an up or down vote, and we have 14 senators signing the memorandum of understanding, then gang of 14. they wrote about their responsibilities under the advice and consent clause. well, let's be responsible. let's be responsible. let's bring it to a vote. the vote on janis rogers brown. she was a nominee and argued that social security was unconstitutional. i think most of us disagreed with her on that, but she got an up or down vote.
1:34 am
agreed to vote cloture on owens on a nominee who rulings in the texas supreme court were so extreme, it drew the attention of other conservatives on that court. in fact, president bush's white house counsel, later attorney general, called one of her opinions as an unconscionable act of judicial, but she was a republican, and she did get a vote. now, i hope two weeks ago when senators joined in voting in the filibuster against judge jack mcconnell of rhode island. this for the day, president obama took office. indeed, for the sixth time since president obama took office, just over a couple of years ago,
1:35 am
we've had to see cloture to overcome a republican filibuster, one of president obama's well-qualified judicial nominations. senators subscribe to a standard that prohibits filibusters of judicial no , nominees expect in extraordinary circumstances should not be able to support this filibuster because as i said there's no extraordinary circumstances here. i think the memorandum of understanding i referred to earlier saying how we should prepare responsibility. in that, we wrote for the president to consult senators. with this president, unlike his predecessor, has been a model in
1:36 am
that regard. unlike president bush whose nominees they always supported, president obama actually has consulted with both republican and democrat senators in the home states, and unlike my preed predecessor, the republican chairman of the judiciary committee, i have not proceeded with any nominee against the wishes of the home state senator, so apparently we have one rule eager to hear to if it's a republican president, and a republican chairman of the committee, but man, oh, man, nothing changes the rules faster than to have democrats here. i protected republican home state senators, and in return, i expect republican senators to respect the views of other senators and to work with the president. by the standard utilized in
1:37 am
2005, supported by republicans to end filibusters, a vote on president bush's controversial nominees, this filibuster should be under the senate to vote on the nomination. last year, senate republicans filibustered the nomination of judge denny chen. outstanding judge, 16 years of experience. delayed his senate consideration for months. there was no reason to do it. finally, when that filibuster ended, the senate proceeded a vote and confirmed the only active asian-pacific american judge serving on the federal appellate court, the only one in all our courts. well, this nominee is likewise
1:38 am
deserving of a vote, and now we have a passing filibuster. vote up. vote down. don't vote maybe. that's not what we get paid for. i say when the committee's unusual second hearing of the nomination after the request of the republican members of the committee, hearing that i allowed, i hope they evaluated him fairly with open minds. any senator who listened to professor liu's answers during hours of questioning and two confirmation hearings and considers responses to hundreds of written follow-up questions, hundreds, to come away understanding this is an exceptional lawyer, a scholar who would make an outstanding judge, a judge who respects the rule of law and reveres the constitution, and professor liu's answers under oath and
1:39 am
respect of the constitutional law paint a very different picture than the caricature created by the special interest groups. no fair minded person can or should question his qualifications, talent, or character. nobody can doubt his temperament. hours and hours and hours of questioning and we heard his judicial temperament, and unlike some of the judicial no , ma'am sees supported by the other -- no , nominees, supported by the other side, he actually answered the questions and he said he understands the role of the judge, the follow the law, adhere to the law. he met every test presented by members from either side of the aisle and exceeds the measures of judicial nominees.
1:40 am
now, i have concerns of a conservative activist law professor nominated by president bush, professor mcconnell would be a conservative activist judge on the 10th circuit. by good faith that he understood the difference as a role of a teacher and advocate and future role of a judge, he assured us he respected the law and appeals judge is down to follow supreme court precedent. his home state senator, senator hatch, vouched for him. the similarity, except for the philosophy, is exactly the same between mcconnell and liu. we voted for mcconnell. they want to stop liu. i hope they treat professor liu with the same fairness that the others have how we treated him, so give the same weight to
1:41 am
professor liu's assurances we did to professor mcconnell's identical assurances, and then vote up or down. >> the confirmation of goodwin liu later fell eight short votes of the 60 votes required to end debate and move ahead. in a few moments, a hearing on privacy issues regarding mobile technology devices like smart phones. in two and a half hours, a look at the so-called security markets bundling together financial products like mortgages and sells them as a single investment. after that, we'll reair the senate debate on the nomination of goodwin liu to the 9th circuit court of appeals. several live events tomorrow here on c-span2.
1:42 am
1:43 am
>> next, a hearing on mobile technology and privacy with congressional testimony from representatives of apple, facebook, and google. they were at a hearing on privacy issues regarding devices like smart phones and tablets including how those devices track the location of users. this is two and a half hours.
1:44 am
>> go ahead and call our subcommittee to order here. i thank everyone for being here. we have a standing room only crowd. i want to welcome senator toomy there. welcome aboard. we're excited about your leadership here and we need to talk about your committee offline, but thank you for being here. senator kerry, thank you for being here. others are on the way, but i'd like to go ahead and start. i know senator kerry only has a limited time here and senator rockefeller is trying to make it in his limited time. let's get underway. i tharng everyone for -- thank everyone for being here and the witnesses for participating today. certainly this is a very important hearing on privacy in
1:45 am
the mobile marketplace. chairman of the consumer protection subcommittee, i appreciate all of your willingness to participate in this very important dialogue. as technology evolves, consumers continue to lose control of their personal information. without question, cell phones have become a part of that trend, and as they've become more and more versatile. today, more than 234 million americans use mobile devices and 73 million americans have smart phones or are expected to own smart phones by the end of 2011. there are hundreds of thousands of sort ware applications, also known as apps, on the market today. apps allow us to play games, share information with friends, read the news, find the cheapest gas in top. in fact, i'm aware of one app that allows people to find the nearest kosher restaurant and nearest synagogue, so there
1:46 am
seems to be an app for everything, and while their innovation and creativity has definedded the mobile app space, we understand that most of the app producers do not have a privacy policy, and the vast majority of consumers who use these apps really don't have any idea about the ways in which their personal information including their age, location, gender, income, and ethnicity that is contained in their phones can be shared either with the company or with third parties. in other words, while smart phone users may voluntarily submit some information to software applications it's not clear how their information may be used or transfer as a result of the down load. last night, i talked to my two teenage chirp, and they had no idea that that information was
1:47 am
being shared, and i think that's how most americans are. consequently, terrorist not surprising that we're facing a new world that lacks basic parameters and best practices. where are the opt out options or where are the privacy policies, and that's some of the things we'll talk about today. the mapping of consumers' movements without concept is un-- consent is unacceptable and a game that transfers location data to ad networks without informing the user is greatly troubling. while location technology can assist law enforcement and there's certainly good things about it, it can be helpful in emergency situations, geolocation tracks also poses serious safety concerns. a therapist working with domestic abuse systems notice increase in client's phones and also incidents where stalkers
1:48 am
exploited the gps system and the location data collected by consumers' smart phones to track victims. results have been deadly in some cases. demonstrating the highly intrusive nature of some of this technology, one website sells something they call mobile spy software and actually markets this product as a completely stealth monitoring program. the website says once installed on a phone, mobile spy remains hidden, but logs calls and techs to mobile spy's server, and then the snoop can log in and see a complete record of up coming -- incoming and outgoing calls, duration of the calls, and read text messages sent and received. i want to hear it our witnesses today about the risk to consumers that consumers see when their information is collected and reported, the consumers' understanding of what
1:49 am
information is being collected or transferred through mobile apps, the extent of geolocation information collection and related privacy concerns, particularly with an emphasis on children there, how companies are working to relay these concerns and suggestions for enforcement of basic privacy rights and security policies and standards in the new app economy and online mobile world, so, with that, what i'd like to do is turn it over to the ranking member and allow you to say a few words, and then we'll call on senator kerry. >> senator, mr. chairman, thank you very much. first of all, thank you for welcoming me as the new ranking member on the subcommittee. this is a new exciting opportunity for me and look forward to serving with you and thank you for scheduling this important hearing on this very important topic, and i commend you for doing that.
1:50 am
unfortunately, i became ranking member in the last few days, and prior to that had a previously dead yuled con -- scheduled conflict so i can't stay, but i want to make a few comments briefly and commend you for doing this. i'm protective of my information and should have control over who accesses that information, how it is accessed, and ultimately how it's used including by commercial entities. as a father, i'm concerned about protecting my children's identify and safety when they use mobile devices and other online applications. they are accessing these through mobile computers and mobile devices more than ever before and making sure parents are well-informed on protecting children is a goal we all share. apple iphones have been tracking and storing locations without consent and facebook apps leek to advertisers are causes for concern.
1:51 am
these and other incidents led many in congress to question whether the federal government has an interest in increasing its role in regulating this space. i do commend apple and facebook for taking swift action in both cases to correct the problem. i prefer to see the industry self-regulate and i'm eager to learn from our witnesses on the measures put in place to safeguard against possible future consumer harms. i think everyone here knows very well the mobile market place is growing and changing rapidly. we have access to mobile devices, speeds, and applications that were completely unimaginable just a few short years ago. apps for smart phones turned into a multibillion dollar business and consumer demand is clearly very strong, and in our important efforts to protect consumer privacy, i just hope that we won't lose sight of the many consumer benefits coming from the innovative technologies that are brought to market by the companies we'll be hearing
1:52 am
from today. as the chairman indicated in his comments location based services provide conveniences that consumers would not have if a particular app didn't have access to some level of personal information, so before congress takes action, i think it's important to find the right balance that protects consumers personal information while at the same time allows continuing constructive innovation to occur. at this appointment, i'm not sure where that line is to be drawn, and i caution against passing legislation that would have unintended consequences. i'm hopeful the hearing today sheds light on this important question, and, again, mr. chairman, i thank you for the hearing. >> thank you very much, and we also want to thank the newest member to the subcommittee and senate, senator heller, proud to have you. now, i was going to call on senator kerry, and the chairman says call on kerry. go ahead. >> well, thank you both,
1:53 am
chairman. welcome to our new members on the committee. mr. chairman, thanks for holding this hearing today. it's obviously one that attracts a lot of interest. it's a lot of money on the line, a lot of business, a lot of business practices, but also a lot of values, personal interests of the americans, and while today's hearing is obviously principally about mobile phones and the apps that come with them which are quite extraordinary in which we all use and benefit from in a lot of ways, it's also important, i think, to put the mobile phone and apps into the context of the larger discussion of privacy itself. i don't think there's anybody on the committee, country, or the world that doesn't marvel at the power and extraordinary potential that we are currently living and that we will live in
1:54 am
the future with respect to the internet. it's constantly innovating and moving, and i'm personally, and i know the chairman, senator rockefeller likewise and others on the committee worked long and hard on the national broadband plan as well as the possibility of releasing more spectrum because we want to see this potential unleashed all across the country as widely as possible and unfortunately across the united states we have been going in the wrong direction. we used to be number four in the world in terms of broadband reach, but now we're 16-20 depending on who you listen to. that's an appalling comment and one to take note of as we think about this. also i support investments in research and development and a bunch of other things that contribute to the startup of different businesses and firms
1:55 am
to unleash our economic potential. we all in this committee understand the automatic instinct inside a lot of the companies that are interested in this which say, hey, washington, just leave us alone. we'll do fine. we'll make this work, and the internet will grow. over the years, i think most of us in this committee have been guided by the belief that in a technology market that is moving so rapidly, that's the right approach in most cases. i've certainly stood by net neutrality. i've stood by no taxation. i have advocated for as open an architecture as possible in order to up leash the full measure of creative energy and entrepreneurial activity that has really brought this wonder to us and continues to innovate.
1:56 am
i'm convinced we made the right decision in the 1990s here to protect -- to do things that did not allow privacy or other issues to somehow eclipse that move for innovation, and i think it might have slowed back then, technology advances, but we're in a different place today. we just are in a different place today. we need companies like google and apple and facebook to join companies like intel, microsoft, hp, who have already come down on the side of common sense, very restrained, simple privacy protections. we need industry leaders to engage constructively in these legislative efforts to modernize our privacy laws, to come up to the year we are in the state of art we are with respect to the
1:57 am
market place because we want the legislation to work for both the consumer and the entrepreneur. now, i've reached out to the companies that are here today over the last six or seven months, an i appreciate the time they have taken to work with us so far. mr. chairman, i reject the notion, and one of our colleagues just sort of raised the, you know, here's what we want to do, but here's what we don't want to do. i reject the notion that privacy, protection is the enemy of innovation. it absolutely doesn't have to be and isn't. in fact, a more trusted information economy, i believe, will encourage greater consumer participation, greater confidence in that marketplace, and in turn, more and better services in a safer commercial environment that is more respectful of other people, so in the end, though, not in a
1:58 am
heavy-handed overly prescriptive approach, i believe that companies collecting people's information, whether you're a tech titan or not, ought to comply with just a basic code of conduct. we need to establish what we as a society, in a country that has always valued privacy, what we as a society believes is the sort of basic proper treatment of people's information. i know you can shut off your location services, but that doesn't do the trick because a lot of those services are services we want, and we want to use them, but we also want to know that what's happening to the information as a consequence of using them is properly protected, that we are properly protected as individuals. i don't think you can continue to create or leave it to firms to decide on an ad hoc basis
1:59 am
what that level of protection ought to be, and i think that's particularly true in an age when the mini supercomputers in our pockets are with us almost at all times and almost always on, and particularly among young people there will be disposition to use most of those apps almost all the time, but it's also true in our computers at home and offline when we buy groceries or when we travel or when we purchase or whatever, so as we sit here today, mr. chairman, there's no privacy law for general commerce whatsoever. data collectors alone are setting the rules. in f799, the privacy bill of rights that senator mccain, senator klobuchar, and i proposed, we propose rules based on fair information practice principles for all

118 Views

info Stream Only

Uploaded by TV Archive on